EAL back-pays over $16 million to thousands of underpaid employees

Subsidiaries also sign Enforceable Undertaking with FWO

EAL back-pays over $16 million to thousands of underpaid employees

Eagers Automotive Limited (EAL) has back-paid more than $16 million to thousands of employees who were underpaid by five of its subsidiaries, according to the Fair Work Ombudsman (FWO).

EAL has back-paid 13,277 current and former employees a total of $16.2 million, including about $12.1 million in wages, $1.1 million in superannuation, and $3 million in interest.

According to the FWO, individual back-payments ranged from less than $1 to $69,298, with the average back-payment about $1,217 including superannuation and interest.

The affected individuals were employees of five Automotive Holdings Group Limited (AHG) subsidiaries, which EAL acquired in 2019. They were full-time, part-time, and casual employees who were hired as finance officers, and in car sales, parts sales, and servicing employees for car and truck dealerships.

EAL self-reports underpayments

The underpayments occurred between 2013 and 2021 and were discovered by EAL after initiating a payroll review after acquiring the AHG subsidiaries, according to the FWO.

EAL self-reported to the regulator in June 2021, disclosing that its 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
  • Failed to pay, as required, when employees were sent home due to no work
  • Unauthorised deductions

"It's pleasing that EAL proactively looked for issues in its new acquisitions, then self-reported to FWO and endeavoured to rectify them," said Fair Work Ombudsman Anna Booth in a statement.

"It is also a good example of the importance of conducting thorough compliance checks when acquiring businesses, and implementing centralised, consistent compliance processes to avoid ongoing issues."

Subsidiaries sign EU

The five EAL subsidiaries involved in the case have also entered an Enforceable Undertaking (EU) with the FWO.

They include the 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.

Under the EU, these subsidiaries must make a combined $450,000 contrition payment to the Commonwealth's Consolidated Revenue Fund.

They also need to complete the back-payment of about $200,000 that are still owed to employees who cannot be found or pay the amount to the FWO's unclaimed monies fund.

"Under the Enforceable Undertaking, the subsidiaries of Eagers Automotive Limited have committed to implementing stringent measures to ensure all their workers are paid correctly. These measures include commissioning, at their own cost, an independent auditor to check they are appropriately meeting all lawful entitlements," Booth said.

Rectifications outside the EU include an additional $1.9 million to be backpaid to 701 current and former employees of 14 other subsidiary companies, according to the FWO.

EAL is Australia's largest car dealership business, with an annual revenue of $9.85 billion, after acquiring Automotive Holdings Group in 2019.

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