AP Eagers underpaid 6200 staff by $4.5m over seven years

Major car retailer AP Eagers is the latest company to admit shortchanging workers by as much as $4.5m over seven years.

AP Eagers CEO Martin Ward. Picture: Mark Cranitch.

Australia’s biggest car retailer, AP Eagers, has become the latest company to confess to underpaying its workers, this time by as much as $4.5m, with the wages scandal now rippling through a range of industries from car dealerships, supermarkets to jewellers.

In a statement to the Australian Securities Exchange on Tuesday, AP Eagers said it had identified anomalies in its payroll system that had led to the underpayment of roughly 6200 workers over seven years.

The AP Eagers disclosure follows a string of companies admitting to having underpaid wages including Woolworths, which discovered it had not paid 5700 workers as much as $300m, Commonwealth Bank, whose underpayments have topped $53m, and NAB, which recently discovered 730 staff were underpaid $850,000.

Other companies recently owning up to underpaying wages include Bunnings, Super Retail Group, Michael Hill and 7-Eleven.

AP Eagers said the he anomolies in the payroll system had resulted in a number of employees not being paid their full entitlements.

It said it identified the inconsistencies during a company-initiated review while implementing a new time and attendance system to centralise its payroll systems.

“These systems have been previously managed by disparate, individual dealerships, some of which were acquired by AP Eagers in recent years,” the company said.

After the inconsistencies were identified, PwC was engaged to undertake an external review of AP Eagers’ payroll to determine the extent to which past and present employees had been impacted. PwC’s assessment has been reviewed in detail by the AP Eagers board.

Following the assessment, AP Eagers self-reported to the Fair Work Ombudsman and pledged to fully co-operate during any investigation conducted by the Ombudsman.

“AP Eagers has determined that approximately 6200 employees have been impacted over a seven-year period. The total payment shortfall equates to $4.5m or just under 0.25 per cent of a total of $2.1bn payments made to employees over that same period.

“We unreservedly apologise to our employees,” AP Eagers chief executive Martin Ward said.

“AP Eagers is committed to paying the amounts owed to past and present employees, in full and with interest, as soon as practically possible. We understand the importance of ensuring our employees are paid their entitlements in full and on time — we take full responsibility for the mistake and we are very sorry.”

Specifically, the issues relate to award classification, the application of overtime, superannuation contributions and deductions, the company said in its statement. “AP Eagers is implementing a centralised time and attendance system as well as improvements to its payroll processes to ensure all employees are paid their full entitlements going forward. Implementation of this system is being closely monitored by the executive leadership team and the AP Eagers Board.

“AP Eagers has also committed to undertake a review of AHG’s payments to employees following its acquisition of the company in September 2019.”

AP Eagers was last month forced to issue a profit warning as some of the worst trading conditions in years for the car sector dented earnings.

In the trading update, AP Eagers said external trading conditions in the national automotive retail sector remained challenging, with the overall market for new vehicle sales in decline for 19 consecutive months, representing a decrease of 126,000 units sold over the same period.

For the 10 months ended October 31, 2019, national new vehicle sales were down 8 per cent on the prior corresponding period.