Random Audits find Retail Sector in Breach

The EI Group
February 2012

1 in 4 retail employers in breach – can you afford to get it wrong?

You may have seen media coverage earlier this month concerning a report on the retail industry compliance campaign conducted by the Fair Work Ombudsman and finalised this month.

The compliance audit that targeted 2000 random employers across Australia found that 26% of retail employers are not complying with the terms and conditions of Modern Awards and the Fair Work Act 2009 (Cth) (“The Act”). The report identified numerous breaches, including the underpayment of over 750 staff members and the subsequent back payment of over $500,000 in wages.

As a whole, the Ombudsman states that this is due to a wide misunderstanding of employer obligations and most employers were not intentionally breaching the Retail Industry Award 2010 and the Act. It admitted that the complexity and difficulties surrounding the transition from the old industrial relations system to the Modern Awards has lead to confusion and poor advice on behalf of the Ombudsman, with their current advice system often leading to such underpayments.

Fair Work Ombudsman Nick Wilson states that “many employers underpay as a result of a lack of information or they made mistakes interpreting the information they have”. This has certainly been seen in the transitioning of penalty rates, where complexities in the transitioning process have seen employers pay higher base rates instead of penalty rates but does not cover what is required under law.

Other breaches however, were through practices such as making employees buy goods within the company and deducting it from their pay, or requiring employees to open or close the store without payment. This was due to outdated or ill advised practices, which were identified through the audit process.

It appears in the report that small to medium businesses were affected the most, in contrast to large businesses, such as the 97.5% of large department stores who were compliant. This was certainly due to issues pertaining to access to HR specialists and legal advice which can help to make sense of the complex system. This was certainly seen, for example, through the case of a small florist in NSW who due to the audit, is required to pay $10,000 in back pay after incorrectly paying 4 casual staff members.

This is a reminder for those employers in the retail sector, and beyond, to be watchful of any changes in workplace laws, and ensure that they remain compliant. Taking advantage of compliance services including wage audits and annual wage updates can help get and keep employers on the right track.

An EI Advantage membership can provide ongoing support for any employment related queries or questions that might arise throughout the year, and identify any practices which are in breach of obligations arising under the Act, or relevant Modern Award. This is better than the alternative, of suddenly finding $10000 in back payment or being prosecuted for breaches.