Sunglass Hut has avoided court action for systematically underpaying hundreds of staff over several years by committing to back paying the workers.
In total, staff were owed $2.3 million.
The company identified the error in August 2016 during an internal audit but did not disclose the underpayments to the Fair Work Ombudsman until March 2017, the same month that the Coalition government introduced new laws that significantly increased penalties for systemic underpayments.
Company failed to pay overtime
The underpayments happened when Sunglass Hut failed to pay overtime to 620 workers between 2010 and 2016 because it made no written agreement with them defining their regular hours and days, as required by the retail award.
The company, owned by multinational eyewear giant Luxottica Retail, has back paid $1.49 million to 457 staff to date, and must now back pay an outstanding $815,391.
Ombudsman defends decision not to prosecute
Fair Work Ombudsman Sandra Parker defended her decision not the prosecute Sunglass Hut, despite the significance of the underpayment, and because the company agreed to back pay the workers, in addition to making a ‘contrition’ payment of $50,000 to community legal centres.
“Sunglass Hut breached workplace laws and their conduct falls short of lawful obligations to their employees, and community expectations,” Ms Parker said.
“This matter highlights that if employers incorrectly apply award conditions, it can have extensive and expensive consequences across the business for years to come.”
Criminal penalties needed
Industrial advocate Miles Heffernan, Litigation Director at Fair Work Act Claims, said businesses that systematically underpay workers should face criminal charges.
“Companies that either deliberately or recklessly underpay their workers should be hauled before the courts and face criminal convictions, or even jail, Mr Heffernan said.
“I think Sunglass Hut has been extremely lucky not to be prosecuted for what was clearly reckless conduct.”
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