The Payroll Wake-Up from Woolies and Coles decision is now part of the Motor Industry

What members need to do before the problem lands on their desk

The fallout from the Woolworths and Coles decision is no longer just a supermarket problem. It has moved into broader retail and may in time move into the automotive industry.

Recently Rebel Sport managers have commenced class action proceedings alleging they were underpaid, overworked, and required to perform unpaid work before and after shifts, during breaks, and from home.   

The Federal Court decision involving Woolworths and Coles made one point very clear: employers cannot simply rely on a salary or broad “all-inclusive” pay arrangement and hope it all works out in the wash. If employees are covered by an award, the business must be able to show that their minimum entitlements have been met, and that the records are good enough to prove it. The Fair Work Ombudsman has also made it clear that an overpayment in one pay period generally cannot be used to fix an underpayment in another.

In plain terms, “we pay them well” is not a payroll strategy.

For the automotive industry, the warning signs are already here. A large dealer network recently, entered into an enforceable undertaking with the Fair Work Ombudsman after more than $16 million was back-paid to employees across several subsidiaries. The Fair Work Ombudsman’s material identified issues including award progression, classifications, overtime, annual leave, annual leave loading, training, unauthorised deductions, time recording and decentralised payroll systems.

Now a specialist class action law firm has announced that it will investigate whether a class action may be commenced against the same dealer network, in relation to alleged underpayments, including unpaid overtime, commission offsetting and failures to keep accurate employee records. The law firm has stated that its investigation covers dealership roles including sales, finance, admin, technicians, detailers and parts interpreters.

In light of the recent court rulings on the proper records to substantiate the working hours of employees, member should be asking themselves a range of questions including:

• Do employees reliably sign in and out?
• Are actual hours recorded, not just rostered hours?
• Are overtime, penalties, public holidays, allowances and leave loading being picked up correctly?
• Are commission arrangements properly documented and reconciled?
• Are salaries being checked against award entitlements each pay period?
• Are leave balances and leave payments accurate?
• Can payroll explain the calculation if challenged?
• Are managers approving extra hours before they are worked?

If the answer is “not sure”, that is the risk.

This is where businesses get caught. Not always because they deliberately underpay employees, but because the system is messy. A manager approves extra hours verbally. Someone works through lunch. A salesperson stays late for a delivery. A technician starts early. Payroll receives part of the story. The roster says one thing, the clocking record says another, and the payslip says something else again.

That is exactly the sort of gap that may turn into a backpay claim.

The fix is not panic. The fix is control.

Members should be reviewing payroll settings, award classifications, time recording, overtime approval processes, leave controls, commission arrangements and salary set-off clauses now. Not when a claim arrives. Not when an employee asks for six years of records. Not when the Fair Work Ombudsman starts asking questions.

The message is simple: if your business cannot quickly prove who worked, when they worked, what they were owed, what they were paid and why, you do not have payroll under control.

The MTA Employment Relations Team can assist members to get ahead of this. We can review classifications, pay structures, employment contracts, commission arrangements, overtime controls, payslip practices, leave records and timekeeping systems. We can also help members build a practical action plan so payroll compliance becomes manageable, not overwhelming. Please contact the team at [email protected]

Get the records right. Get the pay right. Get ahead of it.