Convenience store in firing line for underpayments

Public news

The operator of a South Australia convenience store chain has been ordered to pay almost $65,000 to a low-paid employee who was forced to work for free.

The decision was handed down by Magistrate Stephen Lieschke in the South Australian Employment Tribunal (SAET). He found the company deliberately exploited the vulnerable worker through systematic underpayments while he worked at a company store between November 2015 and December 2016.

The company was ordered to pay penalties of $27,000 for failing to pay for work, $24,300 for taking pay deductions for meal breaks that did not occur, and $13,500 for failing to pay overtime.

"(The company's) explanations for the contraventions is limited and guarded," Magistrate Lieschke said in his written decision. "It is objectively very serious. It was deliberate exploitation of a low-paid hard-working employee. It was not careless or the result of a mistake."

While the magistrate accepted the company had implemented an automated timebook, he said the company had made no changes to its system of rostering or informed workers of their rights.

"There is no demonstrated contrition for this underpayment, or for the applicant having to suffer the indignity of compulsory unpaid work," he said. "The system still depends upon individual managers and employees understanding correctly that all handover work performed prior to the nominal shift time is required paid work. The weakness of the current system means the respondent remains at risk of lapsing into non-compliance."

Magistrate Lieschke said the larger pecuniary costs should act as a warning. "There is a high need to deter this employer from further contraventions regarding unpaid work and proper meal breaks," he said. "The penalty should also serve as a deterrent to other employers in the retail industry and generally."

Magistrate Lieschke found there was a culture of unpaid work at this company. He said the company's evidence did not support the argument that it "merely 'encouraged' staff to 'volunteer' to work for free". The culture was reinforced in induction programs and with written instruction and fostered by senior managers.

The manager of the site said a rule to arrive up to 15 minutes early was observed by "many enthusiastic team members". But the applicant said he was told not to record his true starting time and would face disciplinary action if he consistently arrived at the start of his rostered shift.

Magistrate Lieschke found the company wrongly deducted almost $1,500 from the worker's wages for meal breaks he had not taken. He found meal breaks were not rostered, relief staff were not provided, and that the worker was told to eat prior to his shift and was advised not to use the toilet while at work.

The magistrate was strongly critical of the company, saying underpayment was "systematic". The site manager told the court that workers could take several short breaks, totalling 30 minutes, between serving customers.

The magistrate rejected the employer's submission it was a misunderstanding, and instead concluded the deductions resulted from a deliberately programmed payroll system. "The contravention was not the result of carelessness or a mistake," he said.

He wrote that the worker also agreed to cover staff absences during a busy holiday period, but his employer denied him penalty rates. "[There was] a strategy of creating an impression, in writing, that the applicant had genuinely chosen to work overtime at their own request," the magistrate said.

"His cooperation was rewarded by being required to signing [sic] a form used to deny the penalty rates promised in the CA [collective agreement] for the offered work." He said it was damning that the site manager followed instruction from "higher up" and was not even aware penalty rates should be paid.

The magistrate found the company had no prior history of proven contraventions but there was no evidence of any reasonable steps at rectification. He said there was no evidence of audits or checks to identify similar underpayments and that media statements encouraging workers to lodge complaints also denied any corporate wrongdoing and contained inaccuracies about court judgements.

The email address the company supplied for employees to lodge complaints began with "legal@", which Magistrate Lieschke said was "far from inviting". He said the company's attempt to rely on a statement of apology, remorse and regret supplied by the company's HR manager "rings hollow".

He also said there was an absence of cooperation by the company with the applicant, other than to comply with court directions. "I take account of the enormous time, trouble and expense this individual applicant has been put to by the respondent's wrongful conduct," the judgement said. "The temptation to profit from individually minor but potentially huge pay errors in aggregate must be warned against by an effective deterrent."

If you have any questions about pay rates, Award compliance or underpayment claims, contact the WR team on (08) 8291 2000 or at wr@mtasant.com.au.