Wesfarmers workers win $4.8m in backpay

The underpayments occurred over a decade and included penalty rates, annual leave and overtime entitlements.

Fair Work Ombudsman ­Sandra Parker said an enforceable undertaking was appropriate as the Wesfarmers entities demonstrated a firm commitment to rectifying all underpayments and changing their practices. Picture: Aaron Francis

Wesfarmers will back pay $4.8m to more than 3400 current and former employees of its industrial and safety division and make a $100,000 contrition payment to the federal government under an agreement with the Fair Work Ombudsman.

The underpayments over a decade included penalty rates, annual leave and overtime ­entitlements.

The back payments will be made by seven subsidiaries of Wesfarmers Industrial and Safety, which operate three main businesses: Blackwoods, the Workwear Group and Coregas.

The businesses supply industrial and safety products and ­services, work clothing and uniforms, industrial gases and installations, and environmental and consulting services.

WIS reported underpayment issues by its entities and two now-former subsidiaries, Greencap and Trimevac in 2019 after implementing a new payroll system across the corporate group.

WIS said then that its “preliminary estimate” of the total amount unpaid since 2010, ­including interest, was about $15m, of which it said almost half related to superannuation on loadings and allowances. It estimated 2000 current employees and 4000 former staff were affected.

However, the FWO said on Monday that the underpayments between 2010 and 2020 totalled $4,836,036 plus $246,779 in superannuation. The regulator said 3400 former and current employees were affected.

The enforceable undertaking requires the WIS entities to backpay all known underpayments and superannuation, plus interest of $1,476,827, by the end of the month.

The FWO blamed the underpayments on “payroll system ­errors adopted by WIS in the course of its acquisition of various employing entities in 2013 and 2014, which it failed to correct”.

Entitlements underpaid included base and overtime penalty rates; annual leave and casual loadings; laundry, first aid and vehicle allowance or kilometre reimbursements; and termination payments.

The highest individual underpayment was $38,362 and the average underpayment was $1392.

Fair Work Ombudsman ­Sandra Parker said an enforceable undertaking was appropriate as the WIS entities had demonstrated a firm commitment to rectifying all underpayments and changing their practices.

The back payments will be made by seven subsidiaries of Wesfarmers Industrial and Safety, which operate three main businesses: Blackwoods, the Workwear Group and Coregas.

She said the WIS entities had committed to implementing “stringent” measures to improve compliance and protect the rights of its workforce, including company-funded independent annual audits to check compliance with workplace laws during the next two years.

“This matter demonstrates how important it is for employers to identify and fix non-compliance in their processes, including the continued use of out-of-date and unsupported software systems and the incorrect interpretation and creation of pay rules,” she said.

“Businesses who fail to invest the time and resources to ensure they are meeting all lawful entitlements risk facing large-scale back-payment bills.”

The underpaid employees worked across the country ­including Sydney, Melbourne, Canberra, Perth, Darwin, Newcastle, Wollongong and Mackay. Their roles included retail and customer service; manufacturing; clothing and textiles; engineering; management; laboratory technology; transport and logistics.

The companies must also display notices that apologise for the contraventions across their Facebook pages, public websites and intranets. They must also ensure relevant staff have the right training regarding workplace entitlements; run a hotline for employees; and give free taxation and financial advisory services to affected workers.

New wage theft laws will be part of Labor’s second tranche of industrial relations changes to be introduced into parliament in the second half of this year.

The Australian Manufacturing Workers Union last week called for ­employer-funded paid training leave for union delegates to be ­inserted into the Fair Work Act, declaring the measure necessary to help enforce the proposed “wage theft” and “same job, same pay” laws.

Australian Industry Group chief executive Innes Willox ­accused the union of “blatant overreach”.