Optus Retail is back-paying more than $7.8 million to employees nationally and has signed an Enforceable Undertaking (EU) with the Fair Work Ombudsman that includes contrition payments.
The undertaking comes amid an ongoing shakeup of IR laws and follows similar underpayment cases at fashion retail businesses including Sunglass Hut, Michael Hill, Target, M.J.Bale and The Iconic.
Optus Retail, which operates Optus stores across Australia, is a subsidiary of Singtel Optus Pty Limited, the second largest telecommunications provider in the country.
In April 2021, Singtel Optus self-reported underpayments of Optus Retail to the Fair Work Ombudsman following an internal review.
The underpaid employees were engaged as retail consultants and store managers around Australia between January 2014 and March 2020.
Poor payroll and time and attendance systems, human resources and governance practices led to employees not receiving their full lawful entitlements under the Optus Retail Agreement 2013, the General Retail Industry Award 2010 and the General Retail Industry Award 2020.
These errors included failing to:
- undertake annual reconciliations to ensure that employees were not paid less under the enterprise agreement overall compared to the Award’s minimum entitlements;
- pay retail consultants for work performed before or after their rostered start and finish times;
- pay part-time and casual employees for a minimum of three hours per shift, as required by minimum engagement rules, regardless if they worked for less hours;
- apply a higher classification and pay rate for retail consultants who engaged in higher duties like opening and closing a store and regularly managing the store in absence of a store manager.
As a result, employees were underpaid various entitlements including base rates of pay, weekend loadings, public holiday loadings, meal allowances, overtime rates, no break penalty rates, and annual and personal leave entitlements.
Optus Retail also failed to correctly calculate the mandated six-monthly reconciliations for employees who worked in stores that operated with extended trading hours.
Optus Retail is initially back-paying 3,744 current and former employees more than $7.8 million, including more than $5.4 million in wages and entitlements plus more than $2.4 million in superannuation and interest.
It has already back-paid the large majority of employees, including all it could find, and under the EU must back-pay all impacted staff.
Back-payments range from $11 to approximately $34,000. The average back-payment is about $2,100.
Optus Retail is also required to undertake an assessment of wage payments for retail consultants and store managers, and the six-monthly and annual reconciliations between January 2020 and July 2023 and must back-pay any impacted staff where underpayments are identified.
Fair Work Ombudsman Anna Booth said an EU was appropriate as Optus Retail had cooperated with the FWO’s investigation, undertook a broad review and demonstrated a strong commitment to rectifying underpayments.
“Under the Enforceable Undertaking, Optus Retail has committed to putting in place stringent measures to ensure all its workers are paid correctly. These measures include undertaking another review of employee entitlements covering January 2020 through to July 2023, and commissioning independent audits of its future compliance with workplace laws over the next two years,” Booth said.
“This matter shows the importance of employers placing a high priority on ensuring they are meeting all their workers’ lawful entitlements, including larger employers who have opted to enter into their own enterprise agreements.
“Employers with enterprise agreements need to put in place proper systems and regular checks to ensure ongoing compliance with all their obligations, rather than taking a 'set and forget' approach.
“Optus Retail’s lack of investment in human resources and poor governance led to long-term breaches and underpayments of its staff, and large rectification costs.
“Boards must treat the lawful payment of their employees as a core governance requirement,” Booth said.
Under the EU, Optus Retail must make an initial contrition payment of $450,000 to the Commonwealth’s Consolidated Revenue Fund. The company will also make an additional contrition payment equal to 4 per cent of the total underpayments found in the next review.
The EU also requires Optus Retail to provide FWO with evidence of systems and processes it has put in place to ensure future compliance, including workplace relations training for payroll and human resources staff and mechanisms for regular reporting on compliance with workplace obligations to its parent company Singtel Optus’ board of directors.
The EU further requires Optus Retail to establish a telephone helpline for all current and former employees who worked during the relevant period to make enquiries; send an apology letter to all underpaid employees identified in the March 2020 to July 2023 review period; and provide a signed letter of assurance to the FWO from its Chief Financial Officer, confirming it is now compliant.