The Fair Work Ombudsman has initiated legal action against Super Retail Group Limited (SRG Limited) and subsidiaries Super Cheap Auto Pty Ltd, Rebel Sport Ltd, SRG Leisure Retail Pty Ltd (trading as BCF and Ray’s Outdoors), and Macpac Retail Pty Ltd. for alleged underpayments of more than $1 million.
The legal action comes after FWO launched its investigation in light of the disclosure made by SRG Limited to the FWO and the Australian Securities Exchange that there were widespread underpayments of thousands of employees.
The regulator focused on a sample of 146 of the allegedly underpaid employees, including full-time, part-time and casual staff across all states and territories. It is reported that the employees were underpaid a total of approximately $1.14 million for their work between January 2017 and March 2019, with individual underpayments ranging from small amounts to about $34,500 during the timeframe.
The FWO noted that most of the underpayments were the result of SRG Limited’s subsidiaries paying salaried employees annual salaries that failed to cover their minimum lawful entitlements even if they performed significant overtime work. In addition, the FWO alleged that the methodology used by SRG Limited in its remediation program has resulted in only partial back-payment of the sample employees.
“The breaches alleged in this case – inadequate annual salaries for employees stretching across multiple years – have become a persistent issue for businesses across many industries,” Fair Work Ombudsman Sandra Parker said. “Every employer should be clear that if annual salaries do not cover all minimum lawful entitlements for all hours actually worked, the results can be substantial back-payment bills, plus the risk of significant court-ordered penalties. Penalties can also be higher for serious contraventions.
“This is also the first court action where the Fair Work Ombudsman has alleged breaches by a holding company for contraventions by its subsidiaries,” Parker added. “Holding companies who allegedly knew or reasonably should have known of underpayments within their group will be held to account. We expect that holding companies have thorough governance measures in place to promote compliance across their subsidiaries, and that they act immediately to rectify any problems found.”
The FWO alleged that some of the failures of some SRG subsidiaries between 15 September 2017 and 1 January 2018 to correctly pay overtime entitlements to employees responsible for preparing new stores or refurbishing existing stores (“set up” workers) meets the definition of ‘serious contraventions’ under the Fair Work Act.
The FWO also stated that the four SRG Limited subsidiaries failed to pay all entitlements owed for hours actually worked and that overtime entitlements, weekend and public holiday penalty rates, various allowances and other entitlements were underpaid. In particular, it is alleged that SRG Limited and its subsidiaries knew the overtime contraventions were occurring (or likely occurring) from at least April 2017, but failed to take action to address this until January 2018.
In addition to the the serious contraventions provisions of the Fair Work Act, SRG and its subsidiaries also face possible contraventions of the General Retail Industry Award 2010, Super Retail Group Enterprise Agreement 2015 and the National Employment Standards.
Super Retail Group Limited and the four subsidiaries face penalties for the alleged serious contraventions of up to $630,000 per breach, 10 times the penalties which would ordinarily apply. For the other alleged contraventions, SRG Limited and the four subsidiaries face penalties of up to $63,000 per breach. Holding company liability-related penalties are also up to $63,000 per breach.
The FWO is also seeking court orders for the subsidiaries to rectify outstanding entitlements owed to the 146 sample employees.
The Federal Court in Sydney will handle the case though no date has been scheduled yet.
