On the Run Pty Ltd (OTR) will back-pay or credit about $2.3 million in annual leave entitlements to staff, and has signed an Enforceable Undertaking (EU) with the Fair Work Ombudsman.
The service station and convenience store operator is one of South Australia's largest private employers, and also operates in parts of Victoria and Western Australia.
The Fair Work Ombudsman began to investigate its compliance with workplace laws after receiving a large number of employee queries.
The regulator inspected 15 OTR sites, interviewed employees and managers, and obtained time and wage records. The investigation revealed OTR's failure to accurately identify employees as shift workers, resulting in annual leave accrual entitlements not being met. The annual leave entitlement of shift workers is five weeks per year, rather than the four weeks of non-shift workers.
On the Run responded with a full review which found that 1,524 employees had not received their full annual leave entitlements between July 2018 and February 2023.
In total, On the Run is back-paying 934 former employees more than $975,000, including $792,685 in annual leave plus $138,720 in leave loading and $48,415 in interest. The large majority of these employees, including all who OTR have found to date, have already been back-paid. The EU requires remaining back-payments to be made by July 2024.
The company has also completed crediting more than 43,900 hours of annual leave to 590 current employees, worth about $1.3 million in entitlements including leave loading.
Employees affected by the breaches were full-time or part-time workers, mainly console operators or roadhouse attendants.
Most of the affected employees - including 875 of the 934 being back-paid - worked in metropolitan and regional South Australia. These former SA workers were underpaid a total of $927,069 including interest. They worked across Adelaide, Bordertown, Ceduna, Port Lincoln, Port Augusta, Murray Bridge and Mount Gambier, among other locations.
Small numbers of employees worked in Victoria (44 were underpaid about $40,000, including interest) across locations such as Horsham, Mildura, Ararat, and Traralgon, and in Perth in Western Australia (15 were underpaid about $8,600, including interest).
Individual back-payments to former employees range from about $12 to $6,189, and the average back-payment is about $1,050 including leave loading and interest. Under-accruals for current employees ranged from about four to 179 hours, with the average 74 hours.
Under the EU, the company must also make a $150,000 contrition payment to the Commonwealth's Consolidated Revenue fund.
Fair Work Ombudsman Anna Booth said an EU was appropriate as the company had cooperated with the FWO's investigation and demonstrated a strong commitment to both rectifying underpayments and changes to ensure they were not repeated.
"Under the Enforceable Undertaking, On the Run has committed to implementing stringent measures to ensure all its workers are paid correctly. These measures include commissioning, at their own cost, an independent auditor to check it is appropriately meeting annual leave entitlements," Ms Booth said.
Ms Booth said the matter serves as a warning to all employers about what is at stake if they fail to correctly categorise their employees.
"In this matter, a failure to correctly identify employees as shift workers led to long-term breaches, and significant staff underpayments and rectification costs," Ms Booth said.
"Large employers need to place a much higher priority on having systems and processes in place that ensure employees' full lawful entitlements are met, year-in, year-out."
The workers' entitlements were owed under the Fair Work Act's National Employment Standards, the Vehicle Repair, Services and Retail Award 2010 and 2020, and the General Retail Industry Award 2010 and 2020.
The EU also requires On the Run to engage an independent provider to operate an employee hotline for three months at their own cost and to write to affected staff to tell them the EU has begun.
