Adero understands that many salaried employees within the retail sector simply do not get paid for the hours that they work. In November 2019, Adero commenced a class action against Woolworths Limited to recover additional underpayments and penalties owed to its employees and is currently investigating systemic underpayments owed to employees of other major Australian retailers. Due diligence conducted by Adero to date indicates that employers have adopted a process of paying employees a fixed salary regardless of the hours required to fulfil their required duties.
Despite any voluntary payments made by retailers, Adero believes that employees should scrutinise their own records to ensure that are receiving all entitlements owed to them and is here to assist employees in this exercise though the court approved process. In addition, Adero will seek penalties to be paid directly to affected employees rather than employers paying nominal penalties to the Commonwealth.
HOW DID THIS HAPPEN?
Australia is now facing an unprecedented level of wage underpayment scandals acoss the retail sector and the companies behind household names such as Bunnings, Coles, Woolworths and Target are reporting instances of underpayments to the tune of $500M. Whilst this might seem to be a crisis, it is important to understand that this issue is not a recent phenomenon, and it is important to understand how this issue arose.
The issue originates with the passage of the General Retail Industry Award 2010 on 11 September 2009 and an intentional decision made by large retailers through the Retail Association of Australia to move managers – who are shift managers or other related supervisors – onto fixed salaried arrangements irrespective of how many hours they were rostered to work or did in fact work. This application was ultimately rejected by the Fair Work Commission in August 2013, but the practice was never changed by large retailers.
In tandem with pushing people away from hourly rates of pay, retailers began to demand increasingly more hours from their workforce whilst offering wage freezes that did not account for CPI. This decision meant that those retailers were facing a ticking time bomb whereby salaried workers were going to become increasingly underpaid as the years progressed unless steps were taken to ensure legislative compliance.
Adero is Australia’s leading underpayment class action firm and we are not aware of any retailer that took any steps to ensure that their managers were lawfully paid.
The two key examples of retailers underpaying salaried staff, Woolworths and Coles, were known to us prior to their respective media announcements. We were approached by current and former employees of those retailers who had been raising these issues internally for years. It is clear that those retailers had no clear system for detecting such underpayments.
This ticking time bomb has now come home to roost in what will be Australia’s largest set of underpayment claims across at least 40 major brands within the retail sector. It is Adero’s considered view that there are substantially more underpayments to be admitted to by retailers – including ASX listed retailers – in coming weeks, and there is a strong public scepticism where retailers are reporting low underpayments but in truth are likely to record larger underpayments on review.
Woolworths originally estimated their underpayment bill to be between $200 – $300M; this estimate has now increased to $315M.
What sits in the wake of this ticking time bomb is the failure of retailers to keep accurate records of all hours worked, and the belief that those retailers can rely on their central payroll system to determine what is in truth an abstract and irrelevant pay audit.
Whilst retailers will always cry that there is a complexity in the way that award wages are determined in this country it is important to understand this: where a retailer has made a conscious decision to pay employees at the minimum rate of pay, and not a dollar more, they must carry the burden of any error. It was always open to retailers to operate fairer wage systems – beyond minimum rates of pay. The industry did not operate fairer wage systems and beyond that, did not otherwise provide a basic system of underpayment detection across salaried employees.
At Adero we have developed a sophisticated system to complete wage audits of the General Retail Industry Award 2010 and have applied that as against two of the large retailers so far. With great precision we are able to determine the amount of underpayment to a standard that would allow an employer to understand their obligations and to make voluntary repayments quickly.
Where an employer seeks to adopt a head in the sand approach or seeks to adopt an interpretation of their obligations in a way that is not plausible or sustainable at law, Adero will bring that employer to court and will compel through the class action regime both full compensation of underpayments and additional penalties. It is time to take this position seriously and actually get a fair outcome for retail employees. Join up and share your story with us.