Hunter staff at Australia's largest car dealership business have been back-paid after the company forked out more than $16 million including interest and superannuation to underpaid workers at five of its subsidiaries.
The company Eagers Automotive Limited, formerly AP Eagers, operates automotive dealerships in all Australian states and territories and New Zealand and sells almost all major vehicle brands, including Toyota, Ford, Mercedes-Benz, Kia, Volkswagen and Hyundai.
The underpaid employees mainly worked across the greater areas of Newcastle, Sydney, Brisbane, Melbourne and Perth and signed an "enforceable undertaking" with the Fair Work Ombudsman.
The parties to the enforceable undertaking are five of the company's subsidiaries, acquired in 2019: AHG Newcastle Pty Ltd; AHG Services NSW Pty Ltd; AHG Services Qld Pty Ltd; AHG Services Vic Pty Ltd; and AHG Services WA Pty Ltd.
AP Eagers acquired Automotive Holdings Group Limited in 2019. AHG was the holding company for 19 businesses.
Eagers Automotive self-reported the underpayments to the regulator in June 2021 after it initiated a review of the companies' payroll after acquisition, and found anomalies in relation to 19 AHG subsidiaries.
The self-report revealed that subsidiaries unlawfully failed to pay in line with award progression, incorrectly classified employees, did not pay overtime, annual leave and annual leave loading, did not pay for training; and failed to pay, when employees were sent home due to no work, as required.
They also made unauthorised deductions.
Eagers Automotive has back-paid 13,277 current and former employees $16.2 million, including about $12.1 million in wages, $1.1 million in superannuation, and $3 million in interest. The underpayments occurred between 2013 and 2021.
Individual employee back-payments range from less than $1 to $69,298. The average back-payment is about $1,217 including superannuation and interest.
The company also back-paid an additional $1.9 million, including interest and superannuation, to 701 current and former employees of 14 other subsidiary companies.
About $200,000 is still owed to employees who cannot be found. As part of the enforceable undertaking, payments must be completed within 120 days or be paid into FWO's unclaimed monies fund.
Employees affected by the breaches were engaged full-time, part-time and casually across car and truck dealerships in the network as finance officers, and in car sales, parts sales, and servicing employees.
Fair Work Ombudsman Anna Booth said an enforceable undertaking was appropriate as the underpayments largely related to past non-compliance identified by Eagers Automotive following an acquisition of previously separate entities.
"Under the enforceable undertaking, the subsidiaries of Eagers Automotive Limited have committed to implementing stringent measures to ensure all their workers are paid correctly," Ms Booth said.
"These measures include commissioning, at their own cost, an independent auditor to check they are appropriately meeting all lawful entitlements.
"In this matter, long-term breaches resulted from a lack of a consistent time and attendance system along with reliance upon manual paper timesheets, and a decentralised payroll system - plus a lack of awareness of workers' legal entitlements.
"The companies' disappointing, unchecked breaches left them significant staff underpayments and related rectification costs."
Ms Booth said it was "pleasing" that Eagers proactively looked for issues in its new acquisitions, then self-reported and endeavoured to rectify them.
"Large employers need to place a higher priority on having systems and processes in place that ensure employees' full lawful entitlements are met, year-in, year-out," she said.
