Complaint leads to $350k back pay nightmare

by Stephanie Zillman06 Aug 2012

A single complaint from a service technician in South Australia resulted in the discovery that almost 400 workers had been systematically underpaid at one of the largest business services companies in the world, the Fair Work Ombudsman (FWO) has reported.

Despite a workforce of almost 70,000 worldwide, a payroll error resulted in 396 current and former employees of Pink Hygiene Solutions, owned by Sydney-based Rentokil Initial Pty Ltd, being underpaid over a two and a half year period.

The discovery was made following a complaint from a single worker, who contacted FWO to enquire about under-payment and non-payment of overtime. Deficiencies in Rentokil’s record-keeping practices prevented Fair Work inspectors from accurately calculating outstanding entitlements for the worker. While the complaint was subsequently settled between the parties, FWO issued a contravention letter to the company requiring it to ensure its compliance with workplace laws.

In response, a self-audit by Rentokil revealed the extent of the inadvertent errors in applying overtime provisions between July 1, 2007 and December 31, 2009. The underpayments ranged from as little as $8 to as much as $5,200.

Acting Fair Work Ombudsman Mark Scully says Rentokil has co-operated fully with the agency and the matter is being dealt with by way of an Enforceable Undertaking as an alternative to litigation. As part of the Enforceable Undertaking, Rentokil will make a $40,000 donation to the Working Women’s Centre in South Australia to assist with promoting the need for employer compliance with national workplace laws.

Following a precedent set by a number of fast-food retailers, some companies are now opting to conduct voluntary wage audits in association with FWO to ensure they are paying workers correctly.  

Typically organisations enter into a voluntary agreement with FWO to audit the pay of a cross-section of its workforce known as a Pro-Active Compliance Deed. In independent internal pay audits, firstly a review of the current industrial instrument that applies to the individual workforce – such as an award enterprise agreement or employment contract – is carried out. Then typically the award classification are reviewed to ensure the employee is classified at the correct level and receivingthe correct pay rate, penalties and allowances, including the transitional items where appropriate.


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