Australian department store David Jones and Country Road Group subsidiary Politix owe about $1.9 million and $2.1 million respectively in back-pay (including superannuation) to more than 7,000 underpaid employees, according to the Fair Work Ombudsman.
Both retail entities have connections with Woolworths Holdings Limited (South Africa), with Country Road Group being a current subsidiary, while David Jones is in the process of being sold by WHL to Australian private equity firm Anchorage Capital Partners.
David Jones and Politix have signed an Enforceable Undertaking (EU) with the Fair Work Ombudsman.
The underpayments by both parties, and more broadly in the Country Road Group, were reported by the companies to the Fair Work Ombudsman in September 2020.
The underpayments are said to be caused by failures in manual payroll processes, payroll system set-up errors, annual salaries insufficient to cover all General Retail Industry Award 2010 entitlements, and the failure to compensate training and classification secondments.
As a result of these, the Fair Work Ombudsman said the employees were underpaid their minimum wages, evening, weekend and public holiday penalties, overtime rates, and entitlements arising where they did not receive a 12-hour break between shifts, as owed under the Fair Work Act, Retail Award and multiple enterprise agreements.
The Fair Work Ombudsman also said David Jones did not correctly pay superannuation as required under its enterprise agreements.
Politix underpaid about 850 employees a total of around $2.06 million in wages, plus around $45,000 in superannuation, between November 2016 to September 2020.
David Jones underpaid about 2800 employees a total of around $480,000 in wages, plus around $1.4 million in superannuation to about 6100 employees, between April 2014 and September 2020.
The Fair Work Ombudsman said a large majority of back-payments have been made by both parties.
Fair Work Ombudsman Sandra Parker said EUs were appropriate as David Jones and Politix had shown a firm commitment to rectifying all underpayments and changing their practices.
“Under their Enforceable Undertakings, David Jones and Politix have committed to implementing stringent measures to improve compliance and protect the rights of their employees,” Parker said.
“These measures include commissioning, at the companies’ own cost, independent annual audits to check their compliance with workplace laws over the next two years.
“This matter is another reminder to employers to place a high priority on ensuring their staff receive all their lawful entitlements. Insufficient annualised salaries have become a persistent problem in many Australian workplaces, and breaches – if not quickly found and fixed – can lead to a substantial back-payment bill.”
The EUs require the companies to back-pay the remaining underpayments and superannuation, plus total interest of around $60,000 for David Jones and around $409,000 for Politix, by April this year. Remaining payments relate only to former employees.
Individual wage underpayments were up to $12,576 at David Jones and $22,956 at Politix, and the average underpayment was $170 for David Jones and $2,353 for Politix.
Underpaid employees worked in all Australian states and territories, the Fair Work Ombudsman added. Underpaid Politix employees were managers and retail workers, while David Jones’ staff worked in a range of roles including women’s apparel retailers, managers, online sales staff and logistics employees.
Under their respective EUs, David Jones must make a $130,000 contrition payment and Politix must pay $160,000, each to the Commonwealth’s Consolidated Revenue Fund.
The companies must also continue to run an independent hotline for employees for six months and publish notices in two national newspapers plus their own websites.
Country Road Group found and reported underpayments of lesser amounts at its other entities, Country Road, Trenery, Witchery, Mimco, Country Road Group Logistics.
The lesser underpayments by these other four Country Road Group entities were rectified.