Prominent retailer Sunglass Hut is part-way through backpaying more than 600 employees almost $2.3 million, after an oversight meant that overtime rates were unpaid over a six-year period.
The Fair Work Ombudsman (FWO) said that 620 part-time workers at the sunglasses retailer’s stores nationwide had been collectively underpaid $2,294,496 between 2010 and 2016.
According to the FWO, Sunglass Hut had breached the General Retail Industry Award by not providing written agreements to part-time workers who worked a regular pattern of days and hours. This oversight meant the employees were overlooked for the payment of award-stipulated overtime rates for work carried out beyond standard hours.
The underpayments were discovered internally and self-reported to the ombudsman.
Individual underpayments ranged from as little as $4 up to $42,912, and impacted employees working at 253 stores right across Australia.
The FWO said that the company is partway through reimbursing the current and former employees affected by the underpayments, with more than $1.485 million paid out so far to 457 affected individuals. A total of $815,391 remains outstanding.
“Sunglass Hut breached workplace laws and their conduct falls short of lawful obligations to their employees and community expectations,” Ombudsman Sandra Parker said.
“This matter highlights that if employers incorrectly apply award conditions, it can have extensive and expensive consequences across the business for years to come.”
Ms Parker added: “This outcome should also serve as a warning to all businesses that they need to actively check that they are paying their staff correctly.”
Sunglass Hut reparations
Sunglass Hut is owned by global retail company Luxottica, with the local arm operated by Luxottica Retail Australia Pty Ltd.
As well as backpaying the amounts in full, the company has entered into a court-enforceable undertaking with the FWO that will have external auditors examine the payments and conditions of its entire workforce each year until 2022.
Luxottica is also required to apologise in writing to each affected employee and make a $50,000 payment as a “gesture of contrition” to the National Association of Community Legal Centres.
Underpayments ‘inadvertent’, company says
Approached for comment on the matter, Luxottica issued a brief statement in which it described the breach as an “inadvertent” error.
“Sunglass Hut confirms it inadvertently contravened section 45 of the Fair Work Act 2009 by not adhering to terms of the General Retail Industry Award 2010 (Modern Award) in relation to part-time employees from 1 January 2010 to October 2016,” it said.
“This resulted in the company’s failure to pay the correct overtime penalty rates for hours worked outside the regular pattern of work agreed with part-time employees.
“After Sunglass Hut discovered the error, it self-reported to the Fair Work Commission.”
The company did not directly respond to a question about when the backpayments will be completed, stating only that “Sunglass Hut has made significant repayments to the affected employees, expressed its sincere regret and apologises to employees for failing to comply with the Modern Award”.
Increasing compliance activity in corporate Australia
The revelation of Sunglass Hut’s underpayments comes just weeks after Ms Parker told the National Small Business Summit that her office had noticed an increasing trend of larger businesses self-disclosing payment errors and breaches of workplace laws, and that the FWO would be more proactive in ensuring compliance among corporate Australia.
“We think it’s important to get the message out that it’s not acceptable,” she said at the time.
It also follows the high-profile $7.8 million in wage underpayments at celebrity chef George Calombaris’ MAdE Entertainment, which resulted in a range of reparation orders including that he speak at industry events on the importance of compliance with workplace laws.
SMEs, however, have been told to expect more “non-punitive” compliance notices rather than penalties and legal action, as the FWO seeks to work with employers to build a culture of compliance and educate smaller employers about their obligations.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
Ask the Experts: Business assets and liability after separation
By Anneka Frayne
Anxiety in the workplace
By Staff Reporter
Managing ‘sleeper issue’ of directors’ GST risks
By Jim Koutsokostas