In what it claims is its first litigation seeking to have a holding company found responsible for its subsidiaries’ breaches, the Fair Work Ombudsman (FWO) has initiated court action against ASX-listed Super Retail Group for self-reported underpayments of more than $1 million that led to an internal audit and backpayments exceeding $50 million that the watchdog says remain short of the mark.
The case, filed in the Federal Court yesterday, is pursuing SRG Limited and subsidiaries Super Cheap Auto Pty Ltd, Rebel Sport Ltd, SRG Leisure Retail Pty Ltd (which trades as BCF and Ray’s Outdoors) and Macpac Retail Pty Ltd.
The watchdog says it began an investigation after the company disclosed “widespread underpayments of thousands of employees” to the FWO and ASX in 2018.
The case involves a “sample” of 146 employees across the group who SRG allegedly underpaid $1.14 million between January 2017 and March 2019, mostly due to annual salary arrangements that failed to recognise “significant amounts of overtime work”.
The FWO claims the company’s remediation program “has resulted in only partial backpayment”, due to the methodology it adopted, of amounts owed to the sample employees, who performed management, set-up, retail and administration roles.
The watchdog claims that SRG Limited, Super Cheap Auto, SRG Leisure and Rebel “knew the overtime contraventions were occurring (or likely occurring) from at least April 2017, but failed to take action to address this until January 2018”.
The Fair Work Ombudsman has commenced legal action in the Federal Court against Super Retail Group Limited (SRG Limited) and four subsidiaries, relating to alleged underpayments of more than $1 million.
The regulator is taking action against SRG Limited and its subsidiaries Super Cheap Auto Pty Ltd, Rebel Sport Ltd, SRG Leisure Retail Pty Ltd (trading as BCF and Ray’s Outdoors) and Macpac Retail Pty Ltd.
It is alleged some breaches were ‘serious contraventions’ under the Fair Work Act.
The FWO alleges the four SRG Limited subsidiaries, Super Cheap Auto Pty Ltd, Rebel Sport Ltd, SRG Leisure Retail Pty Ltd (trading as BCF and Ray’s Outdoors) and Macpac Retail Pty Ltd, failed to pay all entitlements owed for hours actually worked, and that overtime entitlements, weekend and public holiday penalty rates, various allowances and other entitlements were underpaid. It is alleged this involved contraventions of the General Retail Industry Award 2010, Super Retail Group Enterprise Agreement 2015 and the National Employment Standards.
The FWO alleges that some of the failures by Super Cheap Auto, SRG Leisure and Rebel between 15 September 2017 and 1 January 2018 to correctly pay overtime entitlements to employees responsible for preparing new stores or refurbishing existing stores (“set up” workers) meet the definition of ‘serious contraventions’ under the Fair Work Act.
It is alleged that SRG Limited, Super Cheap Auto, SRG Leisure and Rebel knew the overtime contraventions were occurring (or likely occurring) from at least April 2017, but failed to take action to address this until January 2018.
The regulator alleges that SRG Limited is liable as a holding company for some of the contraventions between 27 October 2017 and 1 January 2018 because it knew or could reasonably be expected to have known, that Super Cheap Auto, SRG Leisure and Rebel would or were likely to underpay set-up workers and retail managers their entitlements to overtime under the General Retail Industry Award.
Under the Fair Work Act, the serious contraventions provisions apply to conduct occurring on or after 15 September 2017 and the holding company provisions in the Fair Work Act apply from 27 October 2017.
The FWO is seeking penalties against Super Retail Group Limited and each of the four subsidiaries.
The maximum penalties for the alleged serious contraventions are $630,000 per breach, 10-times the penalties which would ordinarily apply. For the other alleged contraventions, SRG Limited and the four subsidiaries face penalties of up to $63,000 per breach. Holding company liability-related penalties are also up to $63,000 per breach.
The FWO is also seeking court orders for the four subsidiaries to rectify outstanding entitlements allegedly owed to the 146 sample employees.
A directions hearing in the Federal Court in Sydney is still to be scheduled.
