In the latest wage underpayment to hit the headlines Super Retail Group Limited (home to brands such as Rebel Sport, Super Cheap Auto, BCF, Rays Outdoor and more) is facing legal action relating to underpayments of more than $1 million following the discovery of serious contraventions of the Fair Work Act.
Super Retail Group self disclosed broad underpayments, however the legal action brought by the Fair Work Ombudsman is focused on a specific group of 146 underpaid employees, who, between January 2017 and March 2019, were underpaid a total of $1.14 million, with some individual staff receiving $34,500 less than they were entitled to.
The core of the breaches are driven by salaried staff being paid a wage that did not adequately cover their minimum entitlements or account for the actual overtime worked.
“This is yet another failure of annualised salaries and a critical failure of modelling” notes ACAPMAs Elisha Radwanowski.
“There have been several high profile cases in the last few years, notably Woolworths which ran into the hundreds of millions of dollars, and the issues were all the same – the business did not account for the actual overtime worked and relied on ‘salary includes reasonable additional hours’ to cover extensive overtime” continued Elisha.
“These businesses are facing underpayment claims now because…that is not how it works. There is a need for the business to carefully and completely model what the employee is entitled to for the whole year when setting the salary” explains Elisha.
“More importantly, the business needs to regularly review the actual hours worked compared to the modelled hours in the salary and adjust the remuneration up if the employee is working excessive, or unmodeled, overtime hours. These businesses have failed to do that and the result is millions in underpayments” adds Elisha.
In this particular case the SRG Limited holding company under which the various subsidiaries are located, is alleged to also be at fault for the underpayments given that it knew, or could reasonably be expected to have know, that the subsidiaries were or were likely to be underpaying staff, particularly those staff that work in set up and those that work in management positions.
In addition to the repayment of all underpayments the holding company and all subsidiaries are facing penalties of up to $630,000 per breach for the serious contraventions and $63,000 per breach for all other contraventions.
More on underpayments due to poor salary modelling
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Elisha Radwanowski BCom(HRM&IR)