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Fair Work puts companies on notice as Wesfarmers estimates $15m in underpayments

Australian conglomerate Wesfarmers has confessed that employee underpayments are not isolated to its retail business Bunnings Warehouse, with the regulator warning of swift retaliation.

Bookkeeper Adam Zuchetti 03 October 2019
— 1 minute read

The Perth-headquartered group, which owns retail chains and also produces industrial, agricultural and safety goods across its diversified operations, revealed in a public statement that a number of its operations are embarking on a “remediation process” after discovering “errors in the payment of team members” in the Wesfarmers Industrial and Safety business unit.

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An initial estimate suggests the underpayment of employees could be in the vicinity of $15 million.

The announcement came just days after Wesfarmers-owned Bunnings revealed that it had underpaid employee superannuation over an eight-year period as the result of a payroll error.

According to Wesfarmers Industrial managing director David Baxby, the company has “significant resources... dedicated to resolving and remedying all underpayments” as quickly as possible, and that PwC had been engaged to conduct an external review into the extent and exact nature of the underpayments.

The situation was said to have been discovered during testing of a new payroll system.

“These were inadvertent errors, but they are deeply regrettable and we apologise sincerely and unreservedly to our team members who have been affected over a number of years,” Mr Baxby said.

“Our priority is to back-pay all affected team members as quickly as possible, including interest, to ensure affected team members are fully compensated. We are also investing heavily in our payroll system, processes and capabilities to fix this issue and ensure it cannot happen again.”

Wesfarmers said that while it is still working to identify the full extent of the problem, it is believed the issue dates as far back as 2010, with around half of the shortfall pertaining to superannuation on allowances and loadings.

The potential $15 million equates to less than 1 per cent of the business unit’s total payroll over the period, the company said, but has potentially impacted as many as 2,000 current and 4,000 former employees.

Not good enough, ombudsman warns

The Fair Work Ombudsman (FWO) issued a brief statement, repeating previous commentary that self-disclosures of workplace law failures are “not good enough”.

“The Fair Work Ombudsman will be holding Wesfarmers to account after self-disclosing significant underpayments of its workers,” said ombudsman Sandra Parker.

“Each week, another large company is publicly admitting that they failed to ensure staff are receiving their lawful entitlements. This simply is not good enough. Companies will be held accountable for breaching workplace laws.

“Companies and their boards are on notice that we will consider the full range of enforcement options available under the Fair Work Act, including litigation where appropriate.”

Wesfarmers said that it had self-reported the breach to the FWO.

Fair Work puts companies on notice as Wesfarmers estimates $15m in underpayments
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