Sunglass Hut admits to underpaying workers $2.3m

David Marin-Guzman
Sep 24, 2019
AFR

Sunglass Hut has promised to back pay hundreds of workers more than $2.3 million after underpaying staff across the country for several years.

The retailer has admitted it failed to pay overtime to 620 current and former part-time 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.

Fair Work Ombudsman Sandra Parker says companies should see the outcome with Sunglass Hut as a “warning”. Paul Jeffers

However, the Fair Work Ombudsman has decided not to seek penalties against Sunglass Hut after the company agreed to pay a “contrition” payment of $50,000.

The case is the latest in a series of million-dollar underpayments revealed by major companies in the past 12 months, including Super Retail Group and George Calombaris’ Made Establishment.

Sunglass Hut’s underpayments occurred at 253 stores across every state and territory and individual underpayments ranged from $4 to almost $43,000.

The company, owned by multinational eyewear giant Luxottica Retail, has back paid $1.49 million to 457 staff to date and must back pay an outstanding $815,391.

Fair Work Ombudsman Sandra Parker said it had opted for a court-enforceable undertaking rather than legal action because Sunglass Hut had committed to overhaul its workplace practices and rectify all underpayments.

“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.”

She said “this outcome should also serve as a warning to all businesses that they need to actively check that they are paying their staff correctly”.

According to the undertaking, the company’s underpayments “arose from a poor understanding of the application of the modern award and a reliance on practices provided for by collective agreements applicable to SGH’s related businesses prior to the modern award commencement”.

This resulted in Sunglass Hut paying part-timers at the ordinary hourly rate of pay for all hours worked, with the exception of a loading for hours in excess of 38 hours.

Sunglass Hut identified the error in August 2016 via an internal audit but did not disclose the underpayments to the FWO until March 2017, the same month that the Coalition introduced new laws to significantly increase penalties for systemic underpayments.

The undertaking requires Sunglass Hut to fund external auditors to check pay and conditions for all workers every year until 2022.

Luxottica Retail must also issue a letter of apology to affected workers.

The company’s $50,000 contrition payment, to be paid to community legal centres, is the lowest for a million-dollar underpayment disclosure since Made Establishment was forced to pay $200,000 for $7.8 million in underpayments in July.