Employers warned in wake of Toys ‘R’ Us case

Employers are being urged to ensure full compliance with workers’ rights after the Fair Work Ombudsman prosecuted retail giant Toys ‘R’ Us for underpaying more than 1,000 employees.

Toys ‘R’ Us workers across the country received $998,000 in back-pay after a FWO investigation found workers were underpaid between 2007 and 2009.

FWO executive director Michael Campbell says the scale of the underpayments is one of the largest ever encountered by the FWO.

“The workers, mostly casuals under 25 – including many teenagers – worked at stores in South Australia, Victoria, NSW, Western Australia and the ACT,” Campbell says.

“They were underpaid entitlements including the minimum hourly rate and penalty rates for weekend, public holiday and night shifts.”

In addition to voluntarily making the back-payment, Toys ‘R’ Us has promised to set up a whistleblower hotline for its staff to complain about wages and conditions.

Campbell says the company has also pledged a $300,000 donation towards the cost of educating and training “young and vulnerable” workers about their workplace rights.

According to Campbell, the agreement with Toys ‘R’ Us is an alternative to pursuing civil penalty proceedings.

“The conditions are part of an enforceable undertaking that Toys ‘R’ Us has signed after the Fair Work Ombudsman agreed to discontinue legal action against the company,” he says.

“The Fair Work Ombudsman announced in January last year that it was prosecuting Toys ‘R’ Us for breaches of workplace law, but accepts that the contraventions were inadvertent and not deliberate.”

In a letter of apology to staff, Toys ‘R’ Us says the underpayments occurred as a result of “inadequate processes” and “inadequate governance measures”.

The letter states: “Since the contraventions took place, new management has been appointed to human resources and Toys ‘R’ Us has taken a number of steps to ensure that this does not occur again.”

FWO media spokesperson Ryan Pedler says the onus is always on the employer to ensure both they and their staff are fully informed of their workplace rights.

Pedler says there are three things employers need to do:

1. Ensure you understand which modern award applies to your business.
2. Apply the correct classification to your employees.
3. Determine which pay rate applies to your employees.

“All of that information is available on our website. If you get those three things right, everything else should fall into place. If you get overwhelmed, you can speak to someone from our call centre,” he says.

The FWO has a range of tools on its website to assist employers and employees check minimum rates of pay, including PayCheck, PayrollCheck and a Pay Rate Calculator.

Online resources also include pay slip and record-keeping templates, a self-audit checklist and fact sheets.

SMEs without HR staff can also ensure they are better equipped when hiring, managing and dismissing employees by using free template employment documentation with step-by-step instructions or accessing a series of Best Practice Guides.

Employers or employees seeking further information can also contact the Fair Work Infoline on 13 13 94.