$300 million reasons to be alarmed

An oversight caused the Woolworths underpayment scandal – don’t let it happen to you

On 30 October Woolworths issued an ASX Statement admitting to underpaying salaried store team members by between $200 and $300 million over the past 10 years.

Woolworths has offered an apology and full remediation for 5,700 employees.

However, the Fair Work Ombudsman (FWO) has indicated that it “is shocked that yet another large, publicly listed company has admitted to breaching Australia’s workplace laws on a massive scale.”

FWO also said, “admission is not absolution” and they will “hold them to account for breaching workplace laws.”

On top of the 7-Eleven and George Calombaris underpayment issues, the FWO is frustrated “that many of these corporates have Enterprise Agreement’s (EA’s) in place that they have negotiated but then failed to properly uphold the minimum standards.”

Why should you be concerned about this?

Since this case was reported, ER Strategies has been fielding a range of calls from clients about making sure they are not at risk of being caught out like Woolworths.  They have realised they are potentially exposed to scrutiny by the FWO and are asking for help from ER Strategies by using our services such as payroll compliance audits, 30 minute emergency consults and requests for tailored advice for senior management.

In the fast food, restaurant and convenience retail stores sectors there can be a range of EA’s applicable so there is a similarity with the Woolworths case. There is a common industry practice in these industries for managers and assistant managers to be paid an “all-up” salary which is meant to cover all potential overtime, penalties for working at weekends and on public holidays, and other award entitlements such as annual leave loading.

This means, as in the Woolworths case, where the employee is mistakenly believed to be an ‘award free’ manager, there is a potential for underpayments when these roles are covered by the Fast Food, Restaurant or General Retail awards in supervisory or lower management roles and a employer has not kept track of the award entitlements compared to the salary paid.

What should you do about this

ER Strategies clients have access to our salary calculators that compare the award entitlements applicable for their business and provides the minimum levels of salary needed to meet the minimum standards. Our payroll auditing services are also available to provide an outside set of eyes to check that salaries paid are sufficient to cover any award or other legislated entitlements.

It is crucial to get a handle on your salary arrangements by reviewing the pattern of work so that if it includes weekends, nights and public holiday work, and that there is a sufficient buffer in the salary to avoid the high risk that you are underpaying your salaried workers compared to award conditions.

If you are concerned you might possibly have an underpayment issue, we have compiled a checklist with your best options that you can download for free.

Avoiding Underpayments

Free Download: Termination Letter Template

Need to let an employee go? Use our letter of termination template to ensure you are using the correct format. 

termination letter template