Starbucks Coffee Australia Pty Ltd (Starbucks) has recently rectified significant payroll compliance oversights across its outlets in Sydney, Melbourne, Brisbane, and the Gold Coast. By back-paying their employees over $4.5 million, Starbucks has emphasised the importance of diligent payroll consulting and adherence to regulations. Moreover, to underscore its commitment to fair practices, Starbucks has entered into an Enforceable Undertaking (EU) with the Fair Work Ombudsman.
In a proactive move demonstrating their commitment to payroll compliance, this ASX 100 entity self-disclosed its discrepancies to the FWO in 2020. This was a result of uncovering underpayments during a meticulous review of their time, attendance, and payroll systems – showcasing the undeniable value of regular payroll consulting.
A significant portion of these discrepancies was attributed to Starbucks not fulfilling its obligations to part-time staff concerning the correct overtime pay, as set out in the Fast Food Industry Award 2010 and the Fast Food Industry Award 2020. Affected roles spanned from baristas and supervisors to assistant managers, many of whom were young professionals, spread across 52 outlets.
A critical oversight was Starbucks’ failure to establish written agreements that clearly defined ‘ordinary hours’ for part-time staff. This gap in payroll compliance led to frequent miscalculations concerning overtime entitlements. Additionally, several part-time employees were not duly compensated for annual leave and public holiday entitlements.
Furthermore, a few full-time store managers faced underpayments because their annual salaries didn’t adequately account for the extensive overtime and weekend shifts they undertook.
In its pursuit of ongoing payroll compliance, Starbucks has now compensated $4.57 million to 2,427 past and current employees who were underpaid between 2014 and 2020. This sum includes over $4.34 million in wages and entitlements, $180,000+ in interest, and upwards of $40,000 in superannuation.
The Fair Work Ombudsman, Anna Booth, recognised Starbucks’ efforts to ensure a compliant payroll by opting for the EU. She praised Starbucks for its cooperative stance and lauded its dedication to address underpayments, notably by investing in independent payroll consulting experts to ensure thorough rectification.
Ms Booth emphasized, “This situation underlines the importance for businesses to prioritise their workplace obligations. For Starbucks, the absence of written agreements for part-time employees and a lax approach to compensating some full-time staff culminated in considerable underpayments and associated costs.”
She further stressed, “It’s crucial for employers to understand that safeguarding young workers and ensuring payroll compliance in the fast food and hospitality sectors remain FWO’s top priorities.”
Consequently, the EU has directed Starbucks to contribute $150,000 as a contrition payment to the Commonwealth’s Consolidated Revenue Fund. Moreover, to ensure future payroll compliance, Starbucks is mandated to:
- Exhibit proof of new, stringent payroll systems and processes.
- Undertake workplace relations training specifically for payroll and store management teams.
- Communicate apologies to affected employees.
- Implement broader corporate governance enhancements.
This incident underscores the pressing need for businesses, regardless of their size or industry, to invest in professional payroll consulting to ensure unwavering payroll compliance.
