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Fair Work Ombudsman Update: Underpayment Cases

A string of underpayment cases illustrate the importance of reviewing employee wages in every industry. We explore a few of those cases.


Food & Retail


Over $1.2 million recovered for food and retail workers


Prior to the COVID-19 pandemic, the Fair Work Ombudsman recovered $1,212,727 in unpaid wages for 1351 workers in the fast food, restaurant, café and retail sectors between December 2018 and March 2020. The underpayments were uncovered by targeting popular food precincts in Brisbane and Melbourne, and retail businesses Australia-wide which had previously breached workplace laws.


As these sectors often rely on young workers, they are considered high risk sectors by the Ombudsman, and will face ongoing scrutiny despite the continuing COVID-19 pandemic.


Fair Work Ombudsman Sandra Parker has stated:

“While we know some of our priority sectors, including many fast food, restaurant and café businesses, have been seriously impacted by the COVID-19 pandemic and are under considerable financial strain, we will continue to enforce workplace laws in a proportionate way…We will focus on ensuring that any underpayments of workers are back-paid promptly, and where serious non-compliance is found, we will take enforcement action.”

Employers in these industries should take the time now to review their payments to staff, and ensure they are compliant with the relevant awards. If you would like assistance or guidance in conducting an award review, please contact the team at Terri Bell & Co.

For more information see:


Manufacturing, Retail & Production


Lush required to back-pay $4 million to over 3000 employees


The Fair Work Ombudsman has entered into an enforceable undertaking with Lush in relation to underpayments reported to the Ombudsman in 2018. The underpayments relate to employees covered by three Awards, including staff employed in manufacturing, retail and production.

The Ombudsman identified the contraventions were caused by inadequate workplace relations systems and processes, lack of training, a manual payroll system and lack of Human Resources department.


Lush is also required to make a $60,000 contrition payment to the Commonwealth’s Consolidated Revenue Fund. The reason for the relatively low amount in comparison to the extent of the underpayment can be attributed to Lush’s co-operation with the Ombudsman in rectifying non-compliance, including by making back payments beyond the statutory limitation period, and implementing new roster, time and attendance, payroll and training systems to ensure future compliance.


They will also be required to obtain external audits (at their cost) to demonstrate compliance with workplace laws for three years.

This enforceable undertaking and the relatively small contrition payment highlights to all employers the importance of: having the proper systems and training in place for staff;

  1. conducting regular reviews and audits of your HR and payroll systems; and

  2. making full disclosures to the Ombudsman and offering full cooperation in the event systematic underpayments are discovered.

The underpayments by Lush also serve as a warning to other ethically minded companies to make sure they are doing right by their employees and following workplace laws, and in addition to working on ethical sourcing or environmental packaging.


The team at Terri Bell & Co can help you with your workplace needs, including by conducting an audit to help you identify areas where your business may be falling short. If you have any questions, please get in touch with us at info@tlblaw.com.au or give us a call on (02) 9191 9856

Fair Work Ombudsman Press Release - Lush signs Enforceable Undertaking


Technology


IBM Signs an Enforceable Undertaking


Multinational technology company IBM has back-paid Australian employees more than $12 million and signed an enforceable undertaking with the Fair Work Ombudsman.


The company self-reported to the FWO last year that they had failed to apply the relevant awards, largely because most employees were salaried professionals earning above minimum award rates. This resulted in IBM failing to provide employees with more than 15 different Award entitlements and conditions, including vehicle allowances, superannuation entitlements and annual leave loading.


Staff at IBM’s Ballarat contact centre were also paid the National Minimum Wage, instead of the higher rates and entitlements in the applicable Award.


The underpayments occurred from 2012 to 2020, and individual back payments calculated to date have been as large as $145,000. Further significant underpayments are still being finalised, and IBM is required to calculate and pay these amounts by 16 October.


The enforceable undertaking requires IBM to:

  • make two contrition payments by 27 November 2020. The contrition payments are to total 5.25% of the underpayments identified for all employees;

  • undergo an expert review of the underpayments, with any further underpayments identified to require a contrition payment at 7% of the underpayment;

  • operate a Hotline to assist its employees for the next 12 months;

  • display public, workplace and online notices detailing its workplace law breaches, and apologise to workers.

This underpayment and enforceable undertaking highlights the importance of reviewing salaried employees’ award coverage, and their award entitlements, even if you believe they are paid above award. You should also ensure these employees’ contracts make appropriate reference to any applicable award and their entitlements, and ensure any annualised salary clauses in the relevant award has been complied with. If you would like assistance or guidance regarding how to undertake an audit, please contact the team at Terri Bell & Co.

For more information see:


Utilities


Western Power Signs an Enforceable Undertaking


Western Australian electricity network provider Western Power has been required to back pay $8.29 million to employees, with further significant back payments still to be calculated and finalised.

The underpayments were self-reported to the Fair Work Ombudsman and arose because the employer failed to ensure employees on individual agreements were better off compared with the Enterprise Agreements that covered the employees. Hundreds of staff are affected by the issues, dating back to 2010.

The enforceable undertaking requires Western Power to:

  • calculate and pay any outstanding amounts to every underpaid employee by 1 October this year;

  • make an initial $400,000 contrition payment, followed by a second contrition next year;

  • operate a hotline for 12 months for employees to make enquiries in relation to their entitlements, underpayments or related employment concerns;

  • display public, workplace and online notices detailing its breaches and apologise to workers; and

  • undergo an independent assessment of its rectification program by a qualified expert, and conduct two future independent audits of its compliance over the next two years.

For more information see:


The team at Terri Bell & Co can help you with your workplace needs, including by conducting an audit to help you identify areas where your business may be falling short. If you have any questions, please get in touch with us at info@tlblaw.com.au or give us a call on (02) 9191 9856. You can also book in a initial meeting with us here.


IMPORTANT NOTICE - The information contained in this article is not intended to be comprehensive. It is general in nature and is not intended to be used as a substitute for legal, financial or other professional advice. You must seek specific professional advice tailored to your personal circumstances before taking any action based on this article.

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