Employers, don’t get ripped off! Stop time theft robbing you blind

Kristin Harris

Kristin Harris

GM Strategic Partnerships

November 19, 2014

Employers, don’t get ripped off! Stop time theft robbing you blind

Kristin Harris, GM Strategic Partnerships
November 19, 2014

There’s a big chance you’ve never heard of time theft. But there’s an equally big chance that it’s costing your business serious dollars. You’re being ripped off and you don’t even know it!

Time theft (sometimes called time stealing) is by definition the practice where employees bill you, their employer for time they have not actually worked. It’s commonplace and can take on many forms, including:

  • Time sheet fraud – recording false information and the practice of rounding up hours
  • Proxy attendance/buddy punching – clocking in or out for a colleague who is not there
  • Late starts
  • Early finishes
  • Long breaks – taking longer or more frequent breaks than authorised
  • Slowing down the pace of work to create overtime
  • Performing personal activities at work – using social media, making and receiving personal calls, even running a separate business.

The cost of time theft

You never see big splashy headlines of time theft because on the surface, it all sounds rather incidental.

However, studies undertaken by Robert Half, one of the largest global recruitment firms, indicate that the average employee “steals” approximately 4.5 hours per week from their employer. This is nearly six full work weeks per year.

In fact, a study by the American Society of Employers estimates that 20% of every dollar earned by a US company is lost to employee theft.

Five minutes, here, five minutes there can really start to add up.

Do the math

For instance, let’s assume you pay your staff on average $25 an hour. If each employee takes just five minutes when they clock in and five more at the end of their shift it is a total of ten minutes per shift.

Assume you have three employees per shift. That is the equivalent of 30 minutes per shift. Over a 52 week year, this is the equivalent of 26 hours per year of stolen time per shift. Using the average wage you pay them, this is equivalent to $650 per shift.

Of course, when you apply multiple shifts and a greater number of employees to this equation, the amount of stolen time quickly escalates.

Accountability matters

To counter time theft accountability is key.

Clearly spell out to your employees what is considered acceptable use of company time. At the same time, be flexible enough to allow for the odd personal phone call, extended lunch, or social media check-in. Introducing a formal social media policy will help.

Of course, automating time and attendance management and introducing face recognition technology into your clocking in and clocking out processes will quickly eliminate opportunities for time theft to be exploited.

Also beware of wage theft

While you’re in the process of stamping down on time theft, it’s a good idea to audit your compliance wages and conditions that are enshrined in Australia’s workplace legislation.

You see, while time theft never makes the news, it’s polar opposite, work theft is constantly making the headlines.

Whether it’s cash-in-hand payments that fail to take into account pay loadings and other entitlements, or failing to pay minimum page, or the practice of working employees off the clock. It’s all wage theft. And it makes some Australian employers sound like common criminals.

Big fines

You see, even if it’s totally unintentional and not at all deliberate, any underpayment of wages or entitlements is a breach of Australia’s national workplace laws.

As an employer, you have a legal obligation to correctly pay your employees, including penalties and loadings, overtime and allowances.

Common complaints of work theft from employees include:

  • Not being paid for all the time they work
  • Having wages docked in order to pay for their uniforms, and
  • Being made to wait for hours for busy periods before they are allowed to clock in.

And while Australia’s workplace rules and regulations are not easy to understand, ignorance is no defence. Non compliance is costly and comes with a high degree of risk.

Simply paying minimum wage and not meeting Award conditions such as failing to pay penalties, overtime rates and other Award allowances can have serious economic consequences for your business.

Backpayments and penalties

For the cash flow of any business, the burden of having to fund unforeseen or unbudgeted payments can be extremely difficult if not impossible to manage. Add to this the substantial penalties and fines handed down from the courts and you and your business could face severe financial hardship.

While most business owners do not deliberately attempt to short-change their staff, it is essential that as an employer, you ensure every employee is paid correctly.

To counter work theft:

  • Be fully accountable for paying your employees exactly what they should be paid and are legally entitled to.
  • Conduct regular audits of your employees’ payslips to ensure compliance with the Fair Work Act.
  • Make it a matter of habit to perform wage checks at the start of each financial year to ensure you’ve accounted for annual increases to Award entitlements.

To achieve accountability and eliminate errors from manual processing, streamline and automate your time and attendance practices with a best of breed that integrates with leading payroll software providers for full control and transparency.

Important Notice
The information contained in this article is general in nature and you should consider whether the information is appropriate to your needs. Legal and other matters referred to in this article are of a general nature only and are based on Deputy's interpretation of laws existing at the time and should not be relied on in place of professional advice. Deputy is not responsible for the content of any site owned by a third party that may be linked to this article and no warranty is made by us concerning the suitability, accuracy or timeliness of the content of any site that may be linked to this article. Deputy disclaims all liability (except for any liability which by law cannot be excluded) for any error, inaccuracy, or omission from the information contained in this article and any loss or damage suffered by any person directly or indirectly through relying on this information.

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Kristin Harris
is GM Strategic Partnerships, advising and working with Deputy’s customers and partners.

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