Underpaid workers remain out of pocket months after employers apologise - ABC

A growing list of companies have admitted to underpaying workers, turning themselves in to the Fair Work Ombudsman and issuing mea culpas in the media, but it can be months or years before employees see any of the cash they are owed.

Last week, Woolworths joined the list, reporting it owed up to $300 million to staff who had been short-changed for close to a decade.

The supermarket giant committed to repaying staff and said the first back-payments would be made before Christmas, covering the previous two years, before extending the review back to 2010 across all its businesses.

However, as the examples of other organisations on a smaller scale have shown, workers may be waiting much longer for their full entitlements to be repaid.

Former worker waiting for details of amount owed

Social worker Elyssa Purdie worked for the Australian Red Cross for 18 months. After she had left, she found out through former colleagues that the charity had underpaid hundreds of staff by misallocating roles under the industry award.

“I guess we were surprised. It was great to hear though that they had discovered the mistake and were looking to fix it,” Ms Purdie said.

The Red Cross underpayment was made public in May last year, but a year and a half later, Ms Purdie still has had no confirmation of how much she is owed and when it will be repaid.

From talking to former colleagues, she believes she may have been underpaid in the order of $2-3 per hour.

“They’re a charity organisation that does really excellent work, so I can understand that coming up with money to back-pay employees would be quite a task that would take quite an amount of time,” she said.

“We haven’t been able to speak to anybody in the team. I’ve been told that they’re not taking phone calls, just emails.”I just wanted to know in my specific case what errors had been made, what that amount of money might look like and I guess a rough time of when that might come, even if they said in two years.”

The Red Cross told the ABC it had reviewed the employee records of 70 per cent of its current workforce so far, and made a “significant amount” of back-payments in December, which it was working to finalise in the next few weeks.

It will shortly begin its review of former employees and expects to back-pay them by June 2020.

“Red Cross relies on its talented people to deliver its vital humanitarian programs for thousands of people across the country and many more in our region and beyond,” it said in a statement.

“We wrongly thought that we had people on the right industrial arrangements but we did not in all cases.

“We are sorry these mistakes happened. We have been doing everything we can to fix them and ensure they don’t happen again.”

‘Months and months and months’ to work out back-payments

The Business contacted a number of other organisations that have admitted to underpaying staff and committed to repaying them.

The following organisations provided updates, revealing that while some had started repayments, none had finished:

  • Cosmetics retailer Lush said it had paid $1.3 million to more than 1,500 staff with interest, and expected to finish all payments by the end of the year
  • Super Retail Group said it commenced back-payments in 2018 and was making “steady progress”, including “a review of millions of shifts and timesheets by independent external experts”
  • The ABC said it had not started back-payments, apart from one individual who was repaid when the issue first came to light
  • Qantas, which underpaid 55 workers and overpaid 165, said it had been making payments throughout its review process, which it expected to conclude by the end of the year
  • Commonwealth Bank started paying back $4.8 million to 8,000 staff in April, in addition to the $16.7 million it began repaying to 36,000 staff in 2017, and said staff were being remediated as the review progressed
  • Jeweller Michael Hill said it had “dedicated teams” working on correcting its underpayment and expected to repay any money owed during this financial year
  • Bunnings, which admitted to underpaying superannuation entitlements in September, said it was too early to provide an update

MAdE Establishment, the company of celebrity chef George Calombaris, paid staff $7.8 million and entered a court-enforceable undertaking with the Fair Work Ombudsman in July.

These instances are dwarfed by the $200-300 million in repayments Wooloworths has flagged.

Employment lawyer Andrew Jewell said the scale and complexity of the Woolworths case meant repayments were likely to drag on for some time.

“For each individual employee, you need to do an assessment of the award rate on a daily basis, looking at penalties and minimum wage rates … over a long period of time, with changing wage rates,” Mr Jewell, principal at McDonald Murholme, said.”It’s also going to take months and months and months to calculate the underpayment, and then I would’ve thought many more months to actually locate the employees, make sure they rectify the payments to the employee’s satisfaction.”

ACTU secretary Sally McManus said the length of time it took to repay workers was a “massive problem”.

“It’s a problem if they apologise, it’s a problem if they don’t apologise, it’s a problem if they hide and pretend the issue doesn’t exist,” she said.

Massive legal and personal costs to pursue wage theft

In cases where employers do not admit to underpayment and instead fight against employees’ wage claims, the time it takes for workers to get what they are owed can blow out even further.

Mr Jewell said if an employee launches a legal case against their employer, it could take one to two years to get to trial.”There’s significant personal costs associated with that, legal costs as well,” he said.

“You’ve also got the difficulty that a lot of these underpayments in and of themselves aren’t massive, so they might not justify the costs that go into it, which is why we might need to look at a system where it’s actually easier for employees to chase underpayments.”

Ms McManus said workers needed to be able to take their employers to a court or tribunal at no cost in cases where repayments were not forthcoming or if a company was denying wage theft occurred.

“There’s very good reason why they delay — under the law, after six years you’ve got no right to get the money back, so a lot of these employers think, ‘Everyday I delay, I’m saving money’,” she said.

“It’s another incentive in the system for employers to rip people off.”

Reference: ‘Underpaid workers remain out of pocket months after employers apologise‘, ABC, Thursday 7th November 2019