Merivale facing class action threat over 'underpayments'

David Marin-Guzman
22 Jan 2019
AFR

Merivale is facing a potential class action over claims its billion-dollar hospitality empire was underpaying workers in breach of workplace laws for years.
Law firm Adero has confirmed it is investigating legal action against Merivale after alleging the company misclassified workers and failed to pay them the legal hourly rate even under its long-expired WorkChoices enterprise agreement.
Adero principal Rory Markham said the firm’s three months of due diligence on Merivale had indicated “potential systemic underpayments of employees since 2013”.
Merivale, whose boss is multi-millionarie Justin Hemmes, is reviewing its workforce and operational arrangements to adapt to the award’s higher pay and conditions. Aleksandar Jason and Jim Lee
He said the firm was accepting class action registrations to recover any underpayments for all current and former Merivale employees.
“We have received a surprisingly high level of interest from Merivale employees expressing their frustration with low, flat rates of pay while working predominantly on nights, weekends and public holidays,” Mr Markham said.
He said the firm believed Merivale’s pay rates left many workers “significantly worse off than they otherwise would be under the hospitality modern award”.
The potential class action is a double hit for Merivale at a time when it is already reviewing the viability of its business practices after Fair Work on Monday ordered it to transition from its expired EA to the more costly hospitality award by March 5.
The 2007 EA legally allowed Merivale to not pay 3000 workers full overtime, evening, weekend and public holiday rates for almost a decade, giving its more than 70 pubs, hotels and restaurants in Sydney a significant commercial advantage.
However, even with an expired agreement, the Fair Work Act still requires employers to apply the base hourly rates in an industry award.
‘Novel interpretation’
Adero is understood to be alleging Merivale only increased casuals’ base rates to the award level of an introductory hospitality employee, a classification that only runs for three months, instead of the level 1 classification with 25 per cent casual loading.
United Voice, the hospitality union, raised similar concerns in its case to terminate the EA on behalf of two employees.
Despite working at Merivale significantly longer than three months, the two workers were allegedly paid introductory rates their entire service – leaving them 68¢ an hour worse off.
The difference allegedly climbed to $1 an hour for level 2 casuals.
The union also alleged Merivale had paid casuals the same for weekday and weekend work since 2016, despite the EA saying workers should received a higher rate on weekends, and had also paid below the EA’s 140 per cent rate for public holidays.
Adero’s potential lawsuit is understood to raise complex and largely untested legal issues over rates owed in expired agreements made before the Fair Work Act.
A Merivale spokeswoman said claims of illegal underpayments were “absolutely incorrect” and that even its lowest base rate was higher than the award’s first three classifications.
A Fair Work Ombudsman wage audit in mid-2018 found that Merivale was compliant with its legal obligations.
The spokeswoman said Adero was relying on “a creative, novel and strained interpretation of the industrial instrument, which is contrary to the FWO’s interpretation”.
“Given the absence of any underpayment, the only winners out of any proposed class action, as always, will be lawyers and litigation funds,” she said.
She urged employees to contact Merivale “where any queries can be dealt with confidentially and within a guaranteed 14 days”.
Rosters to change
Merivale, whose boss is multimillionarie Justin Hemmes, is reviewing its workforce and operational arrangements to adapt to the award’s higher pay and conditions.
The spokeswoman said the review would focus on shifts and rosters “in certain venues at certain times/days of the week, how staff can move between venues within shifts and how we can accommodate many casual staff who have individual shift requests that the new award doesn’t contemplate or allow”.
“To be clear, these are in-venue administrative and operational reviews and are not assessments as to the ongoing financial viability of any individual Merivale venue or the business as a whole.”
Adero’s potential Merivale class action is the first indication that the Canberra-based law firm is turning its sights to alleged underpayments in the retail and hospitality sector.
In the past six months the firm has launched multimillion-dollar class actions against BHP, Hays Recruitment, and other labour hire firms over alleged underpayments in the mining industry.