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Exploited: HR manager's apology 'meaningless'

An employer has been ordered to pay a trainee almost $65,000 in penalties.
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Exploited: HR manager

Exploited: HR manager's apology 'meaningless'

2 September 2020

By Mike Toten

A South Australian convenience store chain has been ordered to pay a low-paid trainee employee almost $65,000 in penalties. The chain had used various tactics that resulted in him being underpaid, including working without pay for regular short periods each shift and not being paid penalty rates for overtime.

A previous decision by the same Court (South Australian Employment Court) found that the employee had been underpaid a total of $2664 over 13 months of employment. The employer appealed against this decision, but lost. The employee then applied to the court for penalties to be awarded against the employer.

The same organisation is also facing a class action on behalf of other employees.


Facts of case

The employer operates South Australia’s On The Run convenience stores, and claims to be the state’s largest private sector employer. The employee was a service station console operator.

The South Australian Employment Court found that the following breaches in relation to the employee had occurred:
  • The employer required him to work an unpaid 10-minute “handover” period before starting each shift. The employer claimed that employees had the option to “volunteer” to work this time, but there was evidence that they received written instructions to do so and were disciplined if they did not. After the first decision in the employee’s favour (see above), the employer introduced a fingerprint scanning system that recorded employees’ start times, but did not guarantee they would be paid extra for starting early. Nor did the employer check whether other employees had also not been paid for starting early.
  • It automatically deducted half an hour’s pay for every shift exceeding six hours for a “meal break”, although the employee had to remain inside the store and was not allowed to use the toilet (which was outside and would have required locking the store). No actual breaks were scheduled or identified, and no relief staff were provided.
  • It did not pay penalty rates for overtime. It claimed that the employee voluntarily requested to work overtime at ordinary rates, however the court found that he would otherwise not have been given overtime work. He was required to sign a form stating that he had volunteered for overtime and agreed to be paid ordinary rates only for it. The Court said that the forms merely indicated a general willingness to work overtime, and did not nominate specific days/hours.

The court found that the employer had formalised a culture of extracting small amounts of daily unpaid work from employees on a systematic basis. Being a cultural issue, it amounted to a single course of (mis)conduct. It estimated that it cost this employee more than 10% of the remuneration he was entitled to. It amounted to deliberate and blatant exploitation of low-paid employees.

Although the individual amounts were not large, its long-term and systematic operation plus the disciplinary actions that backed it up made the exploitation serious.

The court said that the employer showed no contrition and forcing employees onto a routine of having to do unpaid work outside their normal hours was demeaning. Although the employer claimed to have changed some of its practices, others were still occurring and decisions in relation to them were usually made by individual store managers. Furthermore, the employer did not provide evidence that it had investigated its practices to check for possible mistreatment of other employees, plus an apology provided by its HR manager was “almost meaningless”.

The employer had publicly claimed it had not underpaid anyone, including in media releases that invited employees to email any concerns they had about possible underpayments. The same releases stated that any claims would be defended. That did not indicate any contrition.

Overall, the employer had failed to implement rectification actions sufficient to prevent future breaches, and there was therefore a high risk of ongoing non-compliance.


Decision

Given the employer’s lack of remedial action, the court said that its decision had to reflect a high level of deterrence of further non-compliance. It awarded payment of penalties amounting to $64,800 to the employee, which reflected the large amount of time, cost and trouble required to pursue his claim, the employer’s efforts to obstruct it in two previous cases, and his inability to recover legal costs. The breakdown was $27,000 for the unpaid work, $24,300 for the deductions for “meal breaks” that weren’t taken, and $13,500 for not paying for overtime. These amounts were 50%, 45% and 25% respectively of the maxima permitted.

Law firm Adero Law is also pursuing a class action against the same employer for underpayments, with a case management hearing scheduled for 28 August 2020.

The bottom line: The judgment used words such as “brazen”, “deliberate exploitation” and a “systematic” requirement to do unpaid work every shift. It also referred to lack of contrition and only token attempts at remedying the defective practices. For those reasons, the court believed that non-compliance was likely to continue, and the penalties ordered were intended to strongly deter both this employer and others (eg in the same industry).

There is some evidence that tribunals, courts and the Fair Work Ombudsman are keen to “go after” employers whom they regard as serial offenders when it comes to underpaying employees. This is presumably meant to deter other employers who may be tempted to conclude that the savings from underpayment outweigh the likelihood of being caught.


Read the judgment

Mathew v Shahin Enterprises Pty Ltd [2020] SAET 152, 14 August 2020

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