FWA Uncovers Many Cases of Underpayment of Employees in Retail, Services Sectors

Several cases of underpayment among workers in the retail and services industries have been noticed and acted upon by Fair Work Australia (FWA).

Based on random inspections of about 2,000 retail companies, FWA found that 755 retail employees were underpaid. Most of them were in New South Wales which accounted for 41 per cent of total underpayment.

FWA asked the erring firms to reimburse the 220 NSW underpaid workers a total of $237,788.

Smaller amounts of reimbursements were ordered by FWA to employers in Victoria for 187 underpaid staff ($153,820), South Australia (95 staff, $74,729), Queensland (125 staff, $45,071), Western Australia (86 staff, $43,659), Tasmania (28 staff, $12,091), the Northern Territory (16 staff, $10,242) and the Australian Capital Territory (20 staff, $8,001).

The agency also discovered that besides underpayment of salaries, many companies did not pay the proper penalty rates, misclassified workers to underpay their entitlements and did not pay their staff for set up and closing work.

The FWA said other subsectors in the retail industry in which underpayment is prevalent are those in pharmacies, electronics and hardware, and building and garden supply.

Besides retailers, a Federal Magistrates Court also fined a Hungry Jack's operator $46,200 for underpaying 180 workers over four years. The court also ordered Chamdale to pay the workers the proper minimum hourly rate, overtime and public holiday penalty rates, as well as annual leave entitlements and laundry allowance.

Most of the underpaid employees were juniors and apprentices from schools as young as 14 who helped bring in $104,000 to Hungry Jack's tills from July 2005 to December 2009. The largest individual underpayment totaled $8,218 while 29 workers were underpaid by over $1,000.

"Teenagers are often not fully aware of their workplace rights and they can be reluctant to complain, so obviously when we get allegations that this group in society is being underpaid, we treat them very seriously," ABC quoted Craig Bildstein from FWA.

Chamdale operates the Hungry Jack store at the corner of High and Thistle streets in Bendigo, Victoria.

The $46,200 fine is 20 per cent of the applicable maximum penalty of $231,000. The court imposed only 20 per cent since it was Chamdale's first offence and the firm had volunteered to correct all underpayments. The company even hired a specialist industrial relations lawyer and a new payroll adviser to correct the problem, explained Federal Magistrate Norah Hartnett.

The penalty on Chamdale is not related to another Fair Work Ombudsman probe which found that Hungry Jack underpaid 693 of its Tasmanian staff by over $665,000. The fast food operator was fined $100,500 in 2011 for the breach.

Fair Work Ombudsman Nicholas Wilson said the fine on the Hungry Jack operator should serve as a warning to Australian operators to comply with salary requirements set by laws.

Mr Wilson added that his office would soon roll out a dedicated Web page to help the franchise sector address the problem of wage underpayment. An existing sector at its Web site makes available detailed information on workplace laws for businesses included in the Fast Food Award 2010. It covers enterprises that sell meals, snacks and drinks for take-away or in food courts.