Australian firms face hefty backpay claims after misunderstanding awards

Hundreds of retailers have been forced to hand out more than half a million dollars in backpay to their staff after investigations by the Fair Work Ombudsman.

The news comes as the retail sector continues to struggle with flat sales, despite stores slashing prices in a bid to lure money-cautious shoppers.

Random audits of 2000 stores across Australia found more than a quarter breached wage and award requirements, a report released by the Fair Work Ombudsman yesterday showed.

That number is expected to grow, with 300 further retailers suspected of having contravened workplace laws still under investigation.

Electronic retailers and pharmacies topped the list of offenders, with nearly a third failing to hand over correct pay to workers.

Inspectors found retailers were also underpaying worker entitlements, such as penalty rates, and making staff set up and close stores without pay.

Others were illegally making employees buy goods made by the company they worked for and deducting the costs from their pay packet.

In total, more than 750 retail staff underpaid without their knowledge have received $585,000 in overdue backpay after the investigation by the independent watchdog.

The report found many employers were not aware they were acting illegally and instead misunderstood what their employees were entitled to.

"Many employers underpay as the result of a lack of information or they make mistakes interpreting the information they have," Fair Work Ombudsman Nicholas Wilson said.

Australian Retail Association executive director Russell Zimmerman said that while most businesses paid their staff correctly, the audit results were worrying.

He said retailers needed greater education about the complexities of the award wage system.

"If that [figure] remains the same then that's quite a large number of retailers who are obviously not understanding the rules and regulations and all the requirements," he said.

"We're looking to Government obviously to support the industry by educating, giving funding to support the retailers in education of the changes.

"It is not a simple thing to understand."

Small and medium-sized businesses were particularly at risk of misunderstanding the award system and landing themselves in hot water.

"They don't have access to an internal HR specialist, so it's imperative for them to turn to industry associations that can help."

In one example cited in the report, a New South Wales florist learned she had to fork out $10,000 in backpay after incorrectly paying her four casual employees.

Zimmerman warned that some retailers could struggle to pay back their employees given the current retail climate.

"Where would you all of a sudden cough up $10,000 in cash flow on a small business that probably struggles to meet its bills anyway?"

The ombudsman's office said it would continue to work towards improving retailer compliance through advice and education coupled with investigation and litigation.

- AAP