Stock or store credit cannot replace wages after payroll fails
Prevent goods or store-credit offers being treated as wage payment during a payroll failure.
Corporate Recovery Partners
01 / 06
The business has stock but no available cash
Imagine a retailer cannot complete payroll and offers employees merchandise worth the missing wages. The owner sees stock with a substantial retail price and wants to help quickly. Staff still have bills to pay. Treat the wage shortfall as an unresolved money obligation, rather than assuming a product offer solves the payroll failure.
Fair Work states that employees must be paid money for their work and cannot be paid in kind, such as with goods. Its guidance also explains that awards or agreements usually set payment frequency. Get advice on the requirements applying to your employees. An employee's apparent willingness to accept stock should not be treated as a substitute for that advice.
Do not change the payroll record to show wages paid merely because an employee takes goods home. If there is a separate staff purchase arrangement, obtain payroll or employment advice on how it should operate and be recorded. Avoid improvising offsets against wages. The outstanding pay and any unrelated purchase need a clear and accurate treatment.
State the amount still unpaid, what is being done and when the next update will occur. Do not describe stock as equivalent to cash available for rent or groceries. In the hypothetical example, the employer should correct any earlier message suggesting merchandise settles the shortfall and seek advice about any arrangement already made with an employee.
Ask the accountant or relevant adviser to review available cash and immediate obligations. A possible stock sale is a proposal until the buyer, price and payment timing are credible. Avoid promising staff a payment time based on the full retail value of inventory. If the business cannot meet debts when due, obtain urgent professional advice about its position.
Track the wage amount through to actual payment and correct the records with payroll assistance. Review how the shortfall arose before the next pay run. CRP can help organise the financial information for that review. A visible unpaid obligation is more useful than a comforting but inaccurate entry that treats unsold products as wages already paid.
