Underpayment scandals in retail open door for unions

The mea culpa by Super Retail Group was the right thing for the Super Retail Group but it comes at a cost to the retail industry as much as to the retailer.

This is a difficult period for retailers and other employers to navigate with Bill Shorten’s Labor Party within striking distance of winning the Federal election.

Shorten could be described as remarkably candid even brave or, alternatively, arrogant in his expectation of electoral success, with many of the policies he has issued.

The trade union movement has been pressing for an overhaul in industrial relations policy to include pattern bargaining, changes to casual employment definitions and job security as well as increased wages and penalty rates.

There are also moves to extend accountability through modern slavery laws to retailers and other employers whose supply chains could involve the exploitation of workers, and to introduce heavy penalties for wage theft where employees are deprived of their full entitlements in wages and conditions.

The scandal of deliberate and systemic underpayment of employees and non-payment of other entitlements in the retail franchise sector provided ample ammunition to the Shop Distributive and Allied Employees Association for a push to tighten employment laws.

The SDA’s sweetheart deals in enterprise bargaining agreements with several major retailers, including Coles and Woolworths, provided the union with increased political clout but left many retail workers worse off in their pay packets.

The offending EBAs provoked the ire of other unions seeking to re-work the industrial relations laws to boost stagnant wages and expand entitlements for employees.

The franchise sector problems were widespread and involved some of the most celebrated franchisors such as 7-Eleven, Domino’s, Caltex and Retail Food Group.

However, the industrial relations implications were less significant for the entire retail industry than the instances of underpayment of retail employees in major retail companies like Super Retail Group and the exploitation of trolley collectors by contractors to the supermarket chains.

The franchise sector’s wages transgressions might well have been cauterised by some limited legislative changes and more clout for the Australian Competition and Consumer Commission.

But the trade union movement won’t be satisfied unless there is now a much wider crackdown on employers who underpay staff and significant changes to the industrial relations system.

The money involved in the underpayment of wages through EBAs that have not met the no worse off provision of the industry award or the deliberate shortchanging of employees has run to millions of dollars.

For Super Retail Group alone, the underpayment of employees over a six-year period has been disclosed as $32 million, creating a liability on superannuation, payroll tax and interest on the owed wages of a further $11 million.

Super Retail Group is one of Australia’s leading retailers and a strongly performing company on the Australian Stock Exchange over an extended period, even where some of its acquisitions have not met expectations.

The unions now have the perfect foil at the perfect time to the opponents of a toughened industrial relations system with the example of Super Retail Group.

Not that Super Retail Group is the only example, despite its own internal investigation of compliance with employment laws after identifying in August last year that around 4500 workers in store set up teams over eight years were underpaid against award rates.

The latest and much greater underpayment issue at Super Retail Group relates to overtime and allowances to which retail managers in stores were entitled but not fully paid.

The retail, fast food and hospitality industries tends to have more reported problems than other industries and that is possibly due to complex EBAs that try to accommodate the high level of casual and part-time employees across an often more expansive working week that includes weekends and public holidays.

The problem is the SDA and the broader union movement are on a mission to change the industrial relations structure, to increase wages and entitlements and to lift penalties for employers who fail to meet their obligations.

And Bill Shorten and his Labor colleagues are answering the union siren call with promises to meet many, if not all, of the union demands if they do win the forthcoming election.