By Nick Cramp

While a global pandemic and a recession hugely impacted our health, finances, and the way we lived and did business, the Fair Work Ombudsman (FWO) has remained firm that this crisis is no excuse to for employers to underpay staff and it has continued to exercise its powers to investigate and penalise employers who have.

Along with supporting all workplaces through the COVID-19 pandemic, addressing large corporate underpayments was identified as one of the main priorities for the FWO in 2020-21.

With over $123 million in recovered wages for more than 25,000 employees during 2019-2020 (this included $90 million in underpayments that were self-reported by employers), it’s no surprise that the regulator placed underpayments as a top priority.

In response to the FWO’s message, several large corporations  came forward during 2020 to publicly announce self-identified major underpayments within their businesses. In this article, we point out some of the major underpayments, both self-identified or investigated and exposed by the FWO.

Underpayment issues

Before we start reviewing these major underpayments, here’s a summary and description of the type of underpayment issues:

Issue

Summary/key points
Award compliance
  • Failure to pay award minimum rates, penalty rates, overtime and/or allowances.
  • Failure to provide breaks.
Breach of record-keeping obligations
  • Failure to provide payslips.
  • Failure to keep pay records for 7 years.
Vulnerable workers
  • Breach of visa conditions.
  • Exploiting young workers.
  • Exploiting student workers.
  • Exploiting migrant workers.
Serious contraventions
  • Breach of the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth).
  • Repeat offending.
Individual Flexibility Arrangements (IFA)
  • IFA did not meet the genuine needs of the employee.
  • IFA was made with coercion or duress.
  • IFA did not result in the employee being better off overall.
Breach of Enterprise Agreement (EA)
  • Failure to pay penalties, allowances, overtime per the EA.
Breach of compliance notice
  • An employer has failed to comply with a FWO notice requiring them to fix a breach of an Australian workplace law.
Casual employees
  • Casual employees not paid relevant penalties or overtime.
Contract breaches
  • Failure to provide employees with entitlements as set out in their employment contracts.

Fast food, hospitality and restaurant industry

Business name Self-identified or FWO Value of underpayments Employees impacted Nature of issue/s Penalties issued
Soul Origin FWO $78,944 230 Award compliance

Breach of record- keeping obligations

 $11,760
Blue Moon Restaurant FWO $153,353 1 Award compliance

Vulnerable workers (Visa Holders)

 $238,400
Hans Café (Tac Pham Pty Ltd) FWO  $5,111 11 Serious Contraventions

Vulnerable workers

Breach of record-keeping obligations

Award Compliance

 $230,040
Hero Sushi FWO $700,832.88 94 Vulnerable workers (Migrant and student)

Award Compliance

Record-keeping

 $891,000
Anatolia Restaurant (Hobart) FWO $32,411 4 Award Compliance

Vulnerable workers (Migrants)

 $100,000

Retail

Business name Self-identified or FWO Value of underpayments Employees impacted Nature of issue/s Penalties issued
Woolworths Self-identified $500M 5700 Award compliance N/A
Coles Group Self-identified $20M 600 Award Compliance N/A
Lush Self-reported $4.4M 3,130 Award compliance

Breach of record-keeping obligations

 $60,000
Target Self-identified $9M Unknown Award Compliance N/A

Financial services

Business Name Self-Identified or

FWO

 Value of underpayments Employees impacted Nature of issue/s Penalties

issued
Commonwealth Bank Group Self-identified $53M 15,000 IFAs

 

Breach of EA

 N/A
Bank of Queensland Self-identified $11M N/A Breach of EA N/A
Westpac Self-identified $8M 8,000 Underpayment of long service leave N/A

Education

Business name Self-identified or FWO Value of underpayments Employees impacted Nature of issue/s Penalties issued
University of Sydney

 

 Self-identified $9M Unknown Casual Employees

Breach of EA

 N/A
University of Newcastle

 

 Self-identified $6.29M 7,171 Casual Employees

Breach of EA

 N/A
University of Melbourne Self-identified $6M 613 Casual Employees

 

 N/A

Health services

Business name Self-identified or FWO Value of underpayments Employees impacted Nature of issue/s Penalties issued
Walter and Eliza Hall Institute of Medical Research Self-reported $350,322 423 Failure to transition to Modern Awards None
BaptistCare NSW & ACT Self-reported $1.279M 2146 Breach of EA

(Shift workers annual leave)

 $40,000

 Other

Business name Industry Self-identified or FWO Value of underpayments Employees impacted Nature of issue/s Penalties issued
QANTAS Aviation Self-reported $7.1M 638 Breach of EA N/A
ABC Media Self-reported $12,029,038 1907 Breach of record-keeping obligations

 

Breach of EA

 $600,000
Kia Silverbrook

Mpowa,

Super lattice Solar,

Priority Matters

 

 IT, Research and Patent Application FWO $1.15M 33 Contract breaches $264,690
Sunwater (QLD) Government Water services

 

 Self-reported $2.3M 73 Contract breaches

Record-keeping obligations

 $100,000
HRS Country Horticulture Labour Hire FWO $78,664 80 Award Compliance

 

Vulnerable workers

 $22,440
IBM Technology Self-reported $12.3M 1647 Award compliance 5.25% of the Underpayments
National Library Government Services

 

 Self-reported $245,359 106 Superannuation payments None
Joys Child Care Childcare FWO $54,752 2 Breach of Compliance Notice $30,240

Whilst many of the examples above were self-identified and reported to the FWO, it remains a priority of the FWO to continue investigating and rectifying underpayment claims in 2021.

It is important to highlight the FWO’s continued focus on protecting vulnerable workers.

In November 2020, a Hans Café franchisee was penalised for repeat offending against young and migrant workers. This was the first time a penalty was applied for serious contraventions of the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth).

In response, and as a warning to employers, the Fair Work Ombudsman Sandra Parker commented that these penalties act as a significant deterrent for repeat offenders and the FWO will continue to make full use of the Protecting Vulnerable Workers laws to ensure that any individuals or companies who commit serious contraventions are held to account.

It is also important to remember that businesses are required to keep payroll records for at least seven years. This is because employees can potentially make an underpayment claim for up to six years after the cessation of their employment.

External support

If finding time to manage your compliance is difficult, or you’re unsure whether you’ve got the basics right and would pass a FWO audit, there are cost-effective solutions available to you.

HR Assured offers industry-leading audits that will determine if you’re a non-compliant business, where you’re non-compliant if you are, and help you fix any issues. We’ll even take care of your compliance afterwards, with full HR support and an award-winning Telephone Advisory Service. Get in touch  with us if you’d like to find out how we can help.

Nick Cramp is a Workplace Relations Consultant at FCB Group and HR Assured. Nick advises SMEs across a broad range of industries on all HR and employment relations matters including the Fair Work Act, National Employment Standards, Award compliance, employment contracts, performance management, unfair dismissal, general protections, wages, recruitment, WHS, HRIS, redundancy, and major workplace changes and updates.