Clean house or be sorry

The retail industry has, at best, six months to address wage and entitlement issues if it is to avoid or at least moderate tighter federal workplace laws.

It may already be too late for the retail industry to influence looming legislative changes but serious and substantial efforts will be needed to temper the political will of Bill Shorten’s Labor Party. It is virtually impossible to see how the fractured Coalition government can win the federal election that must be held by May 2019.

Shorten is effectively now the prime minister in waiting, and his industrial relations policies are replete with concessions to the union movement. A Shorten government will reverse the decision to reduce penalty rates in the retail industry, review the Fair Work Commission and, no doubt, appoint more commissioners with union backgrounds. Wage theft legislation also seems likely.

A Shorten government may also follow some state governments in extending entitlements for long service leave and, most likely, curb some of the tolerances that have crept into enterprise bargaining agreements (EBAs).

The problem for the retail industry is that the practices – deliberate or inadvertent – of some significant retailers have provided an incoming Shorten government with the evidence it needs to justify tightening workplace laws.

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Retail industry fractured

In terms of moderating tougher legislation, the retail industry is not well placed: the only thing more fractured than the Liberal Party at the moment is the representation of the retail industry.

Russell Zimmerman, who heads the Australian Retailers Association, argues that many of the problems with payroll errors and breaches of workplace laws result from the complexity of the legal framework.

There are obviously difficulties in interpreting awards and even some of the enterprise bargaining agreements that have been negotiated by major retailers with the Shop Distributive and Allied Employees Association, particularly in adjusting wages to changing staff rosters.

Zimmerman is right to point out that there is a need to provide a clearer and more logical framework, but the industry is not on the
front foot at this critical time compared with the union movement.

Moreover, the fragmented representation of the industry will make it difficult to persuade an incoming Shorten federal government to opt for a consultation process and objective examination of issues surrounding pay and entitlements for retail employees.

If the retail industry has any chance of influencing changes to workplace laws, the industry associations must work together and engage with members of Parliament and the union movement.

The Australian Retailers Association, the Australian National Retailers Association, the Large Format Retailers Association, the
National Retailers Association, the Franchising Council of Australia, the Master Grocers Association and the Pharmacy Guild all need to tackle the workplace issues ahead of the federal election.

Damning media reports

The challenge confronting the retail industry is arguably greater than on any previous occasion because of the damning media reports on the underpayment of employees and, in some cases, the exploitation of visa arrangements.

The political and public view is that the retail industry does not seem to have learned any lessons from the wage scandals at 7-Eleven, Dominos, Pizza Hut and others.

Incredibly, the Domino’s Pizza chain has reinforced concerns about the compliance of retailers with workplace laws this month with an audit by Fair Work Ombudsman finding that 19 of 33 stores in Brisbane, Sydney, Melbourne and Adelaide have underpaid staff. Despite the franchisor undertaking its own audit program after systemic underpayment of wages and entitlements by franchisees
and the wake-up call of regulator intervention, the latest Fair Work audit found only four Domino’s outlets were fully compliant with
workplace laws.

The current federal government has already enacted legislation that can hold a franchisor accountable for breaches of workplace

laws by their franchisees, and the Fair Work Ombudsman claims there continue to be systemic problems in the Domino’s network.
The underpayment of retail employees, which is being labelled as wage theft by the unions, has also extended to some of the leading
retail chains in Australia. There are now legal challenges to EBAs on the basis that some agreements breached a “no worse off” provision in the Fair Work Act.

The Lush cosmetics chain has agreed to pay $2 million to staff after it was identified that 5000 retail and manufacturing employees
had been underpaid over the past eight years.

In a statement, Lush indicated the massive wages breach to inefficiencies in its payroll system during the 2010 transition to the
Fair Work Act’s system of “modern awards”. Another employer group, the National Retail Association, said businesses large and small needed to be “alert and proactive” when dealing with pay and entitlements.

Pleading award complexity

Super Retail Group, which includes the Rebel, BCF and Supercheap Auto chains, also identified through an internal review that staff had not been paid the full wages and entitlements due to them under their award conditions.

Super Retail Group has allocated $7.9 million for back payments to staff along with an interest payment of 5.5 per cent a year.
In both the Lush and Super Retail Group instances, the underpayments were inadvertent and were detected by internal company audit processes and, according to the Australian Retailers Association, highlighted the complexity of the awards system.

The association has told a Queensland inquiry, for example, that there are more than 100 potentially different pay rates in the
retail award. While Lush and Super Retail Group face multi-million-dollar back payments, Woolworths is facing a legal challenge from the Retail and Fast Food Workers Union involving a claim that its employees were shortchanged $1 billion under a 2012 EBA
negotiated with a rival union, the Shop Distributive and Allied Employees Association.

The retail industry faces a significant challenge to influence a Shorten-led, union-friendly federal government and the time for
talking is now, not after the election.

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