A prospective newsagency purchaser recently declined to proceed with a purchase after they discovered that two full time employees were being paid under the award and were paid in cash. The annual saving to the business was in excess of $25,000, which was reflected in the profit and loss statement for the business.
The accountant for the prospective purchaser discovered the issue during due diligence. This is pretty easy really – checking hours worked from the roster with published award rates.
While this illegal behaviour by this one newsagent is rare, it can impact on all newsagents.
As the purchaser intended to run the business with all employees fully on the books they sought to discount the requested goodwill down. The vendor refused.
The prospective purchaser commented to me that the discovery of the underpaying caused them to not trust the vendor. I am sure I am not the only person involved in the newsagency channel who has been told the story.
If you underpay employees and or pay cash in hand to reduce your obligations you will get caught by the ATO, by a prospective purchaser or by some other person. It’s not worth it. Don’t damage your investment, employee relationships or the good name of the newsagency channel.