The Fair Work Ombudsman has commenced legal action in the Federal Court against Super Retail Group Limited (SRG Limited) and four subsidiaries, relating to alleged underpayments of more than $1 million.
The regulator is taking action against SRG Limited and its 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.
It is alleged some breaches were ‘serious contraventions’ under the Fair Work Act.
The Fair Work Ombudsman investigated after SRG Limited disclosed widespread underpayments of thousands of employees to the FWO and the Australian Securities Exchange.
The FWO’s legal action focuses on a sample of 146 of the allegedly underpaid employees across the group. It is alleged that the employees were underpaid a total of approximately $1.14 million for their work between January 2017 and March 2019.
The regulator alleges 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, given they generally performed significant amounts of overtime work.
The FWO also alleges that the methodology used by SRG Limited in its remediation program has resulted in only partial back-payment of the sample employees.
Fair Work Ombudsman Sandra Parker said keeping large corporate sector employers accountable for any underpayments remained a priority.
“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,” Ms 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. Holding companies who allegedly knew or reasonably should have known of underpayments within their group will be held to account,” Ms Parker said.
“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 alleges underpayments of individual sample employees ranged from small amounts to about $34,500 during the timeframe. The sample workers, which included full-time, part-time and casual staff, were based in stores located in all states and territories across Australia.
The workers were responsible variously for store management, setting up stores, retail and administration.
The FWO alleges the four SRG Limited 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, 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. It is alleged this involved contraventions of the General Retail Industry Award 2010, Super Retail Group Enterprise Agreement 2015 and the National Employment Standards.
The FWO alleges that some of the failures by Super Cheap Auto, SRG Leisure and Rebel 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) meet the definition of ‘serious contraventions’ under the Fair Work Act.
It is alleged that SRG Limited, Super Cheap Auto, SRG Leisure and Rebel 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.
The regulator alleges that SRG Limited is liable as a holding company for some of the contraventions between 27 October 2017 and 1 January 2018 because it knew or could reasonably be expected to have known, that Super Cheap Auto, SRG Leisure and Rebel would or were likely to underpay set-up workers and retail managers their entitlements to overtime under the General Retail Industry Award.
Under the Fair Work Act, the serious contraventions provisions apply to conduct occurring on or after 15 September 2017 and the holding company provisions in the Fair Work Act apply from 27 October 2017.
The FWO is seeking penalties against Super Retail Group Limited and each of the four subsidiaries.
The maximum penalties for the alleged serious contraventions are $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 four subsidiaries to rectify outstanding entitlements allegedly owed to the 146 sample employees.
A directions hearing in the Federal Court in Sydney is still to be scheduled.