Best of 2019: Payment scandals

The retail news wasn’t all rosy in 2019. Revelations of underpayment across major businesses drew criticism from the public, the Fair Work Ombudsman, the Morrison government, which drafted legislation to criminalise deliberate wage theft, and the Senate, which referred the issue to a parliamentary committee for further inquiry.

Retailers’ failure to pay staff correctly has alternatively been pinned on the complexity of the modern award, outdated EBAs, manual payroll processes and corporate indifference, if not outright greed.

Let this recap of the biggest underpayment stories of the past 12 months serve as a wake-up call to retailers to get their payroll in order. The clock is ticking.

Industry, unions divided over “complexity” of award system

A review of the award system to take place in 2020 has been hailed by industry groups as a necessary step to achieve a simpler and more user-friendly General Retail Industry Award and reduce the incidence of underpayment in the sector.

“I don’t think anyone can deny our Modern Award is complex,” Dominique Lamb, the chief executive of the National Retail Association (NRA), said.

“The reality is it will serve everyone – both employers and employees – to have a really clear understanding of their obligations.” 

Wage thieves to face parliamentary inquiry

Wage theft scandals sweeping Australia’s retail and hospitality sectors will come under close scrutiny during a wide-ranging parliamentary inquiry into worker rip-offs.

Labor senators in November referred wage and superannuation underpayments across all industries to the upper house’s economics committee. The inquiry will look at the extent and effects of unlawful underpayment of workers and what can be done to tackle the issue.

Franchisors could face penalties in new wage-theft laws

Franchisors will need to tighten controls and ensure they have clear employment guidelines and processes in place to guard against the underpayment of staff. 

The exploitation of students on working visas and Australians, usually employed as casuals, has prompted the federal government to draft legislation that could make franchisors liable for heavy fines and imprisonment if franchisees don’t comply with workplace laws.

Corporate retailers could also be prosecuted for serious breaches of workplace laws involving the exploitation of employees, but franchisors are at greater risk under the proposed new legislation because staff in franchises are generally recruited and managed by franchisees.

No, a ‘complex’ system is not to blame for corporate wage theft

Is Australia’s award system so complex major corporations capable of handling millions of customers and billions of dollars can’t manage to pay employees properly?

That’s the spin flowing freely in the wake of Australian supermarket behemoth Woolworths admitting it had underpaid about 5700 staff by up to $300 million. But here’s why this blame-shifting is wrong.

FWO on underpayment: self-disclosure no longer enough

Big business wage thieves looking for a soft response from the workplace watchdog are going to be disappointed, with Fair Work Ombudsman Sandra Parker declaring an intention to be hands-on with big firms who confess underpayments.

Speaking at a Council of Small Businesses Australia summit in Melbourne in September, Parker said some large companies have been “sloppy” in their payroll practices, failing to keep their houses in order.

“We’re getting a lot more companies coming to us self-disclosing large underpayments, many of them going back many years,” Parker said.

Franchising report reveals “deeply rooted cultural problems”

In a long-awaited report on its inquiry into the sector, released today, the Senate said the current regulatory environment has failed to deter poor conduct and exploitation within the sector and created an imbalance in power.

One of the major issues in the sector presented in the report is wage theft, partly due to the business model franchisors operate under, and partly due to social and cultural problems within the industry.

On that basis, it recommends giving greater protection to franchisees and whistleblowers and applying greater penalties for misconduct. This would involve making several changes to the Franchising and Oil Codes and giving more responsibility and enforcement powers to the ACCC to conduct investigations into misconduct in the sector.