UNCOVERING UNDERPAYMENTS AND DEALING WITH THEM

Published on: Jul 29 2020

Underpayment of wages has become a huge issue across many industries, including retail.

The classic case of this in Australia was 7-Eleven – but it is just one example of so many where some employers systematically underpaid workers, taking millions in unpaid wages and unpaid super.

The problem is so large because the chance of being caught is so small and the penalty if you are caught is so low. Old rules that allowed unions to check all employers wage books, all employees wage records and backed up by an industrial magistrate’s court that allowed for swift resolution of underpayments have been removed from the system. So the vulnerable or the unrepresented are ripe for exploitation. In a country as wealthy as ours, we can do better. The system needs reform.

Add to this the problem of salaried managers being underpaid large sums of money because their individual contracts are not properly compensating them compared to the underlying Award, and we see companies reporting underpayments of millions of dollars. Bunnings reported a significant underpayment following an SDA Organiser raising an issue of calculation of superannuation. Woolworths salaried managers started to compare their salary when they were working at night to the hourly rates of pay of those they were managing – rates that were secured by the SDA for those on hourly rates of pay. A review by Woolworths led to them self-reporting a huge underpayment that is still being worked through, and nine years of underpayments being calculated.

As soon as the Woolworths underpayment was announced, the SDA wrote to more than 100 retail and fast food companies in November last year, requesting that they audit their payrolls.

Since then, we have had announcements by Coles, Target and Super Retail of underpayments to employees. This widespread problem not only hurts hard-working Australians, but the reputations of the companies themselves.

The Branch has been working with a big box retailer, for some time now, who has been systematically underpaying our members for over 10 years.

Whilst one member had their underpayment issue successfully resolved several years ago with SDA assistance the rest of the members in store were reluctant to address their own personal underpayment issue.

In most cases they were unaware of a potential issue and chose as individuals not to do anything.

Through the rollout of a new Agreement, the SDA held information sessions which created a lot of questions. It became apparent there may be large number of underpayment issues that needed investigation and possible restitution.

Members at the store decided to come together, with the help of their SDA store Delegate and Organiser to collate the necessary information for the SDA to approach senior management.

Each individual member had different issues due to length of service, rosters worked, their position and duties.

Each member believed that the business was paying them correctly. They also had varying interpretations of the Agreement, as well as views shared by previous managers that they simply believed.

There is no evidence to suggest the underpayments were deliberate, however, the trust that the business was paying them correctly has diminished and not advising employees as to their rights at the time was disappointing.

HOW DID IT GET TO THIS?

Australia did not have a systematic wage theft problem when unions had the right to spot check company payrolls. Successive Coalition Governments stripped unions of those rights and now we have a serious problem, getting worse by the day.

Unions were an effective ‘cop on the beat’, looking after the interests of employees.

Unions did this for their members for nothing more than their membership fees. It did not cost the Government or the taxpayer a cent. The Fair Work Ombudsman does not have the money or the resources to ensure all workers are paid what is legally theirs.

WHAT IS THE ANSWER?

While there may be a place for criminal penalties in serious cases, as proposed by the Morrison Government, the focus should be on workers receiving their money speedily. Criminal proceedings are expensive, protracted and do nothing to get workers back what they are legally owed in the short term if a business goes into administration in the meantime.

To deal with this issue, we need to:

  • restore to unions the right to spot check company payrolls of all workers;
  • restore arbitration rights to the Fair Work Commission combined with an industrial court that allows for swift resolution of underpayments;
  • allow unions to collectively bring underpayments for members with the same employer in the one set of proceedings;
  • restore a small claims jurisdiction where simple matters can be dealt with quickly with limited legal formalities; and
  • significantly increase penalties so that the penalty for underpayment is at least three times the value of the underpayment. In the most serious of cases, criminal penalties should also be considered.

The issue of enforcement of pay and underpayments is currently under review by a working group of unions, employers and the Government. Any solution to the problem needs to include at least the five points raised above.

In the meantime, we are working with members to audit companies to ensure that these recently uncovered underpayments of salaried employees are fixed properly and as soon as possible.

Do you think you may be being underpaid? Contact the SDA immediately so we can help you!

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