French manufacturing behemoth Thales, a multi-billion dollar defence contractor with the Australian government, was ordered to backpay workers over $7 million in underpaid wages but has avoided any significant fine from the Fair Work ombudsman.
The ombudsman on Friday announced it found Thales Australia underpaid 407 employees a total of $7.44 million between 2011 and 2018 by enlisting workers on annual salaries below their legal enterprise agreement entitlements.
However beyond repaying its workers, Thales was only instructed to “apologise to its highly-skilled and committed employees” and pay a $200,000 “gesture of contrition” to the government.
It will also be forced to improve its record-keeping and payroll system.
Thales, whose relationship with the Australian government came under the microscope amid accusations of contempt of Parliament late last year, works closely with the government on defence, aerospace and security, including with the Australian Defence Force and CSIRO.
The Fair Work ombudsman said Thales self-reported the underpayments last year and advised the major workplace unions. Affected employees were last year backpaid amounts from $2593 to $158,978.
Thales avoided a fine because it had agreed to backpay workers and committed to overhauling its workplace practices, Fair Work Ombudsman Sandra Parker said.
“This outcome sends a strong message to employers that if you don’t prioritise workplace compliance, you risk underpaying staff on a large scale and facing a massive back-payment bill,” Ms Parker said.
Thales recorded a company-wide profit of 1.685 billion euros ($2.77 billion) in 2018. Its Australian division employs 3900 people.Add to shortli
Last year it admitted to lobbying the government to prevent the Auditor-General from publishing findings on whether a $1.3 billion Thales contract with the Defence Force provided value for money because the information was “highly prejudicial to the commercial interests of Thales”.
The Australian Defence Department offered little comment when asked how it would respond to the Ombudsman’s findings.
“Defence understands that Thales has entered into a Court-Enforceable Undertaking with the Fair Work Ombudsman due to a workplace breach of non-compliance arising from underpayments to current and former employees,” a spokesman said in a statement.
“The Department also understands that Thales self-disclosed the underpayments, repaid the amounts owed and has been cooperative with the Fair Work Ombudsman.
“Defence will not comment further on this matter.”
Thales Australia chief executive Chris Jenkins confirmed 235 current and 172 former full-time workers were affected including middle managers, professional and technical staff.
He said employees were paid above the industry-wide minimum rates, but some salaries and awards were below those in Thales’ enterprise agreements.
“We have made it clear that these errors should not have occurred, we’re sorry they happened, and that having discovered the problem we fixed it as a matter of urgency and put in place measures to ensure it doesn’t happen again,” he said in a statement.