Staff get back pay from Chemist Warehouse

How did Chemist Warehouse comply with its agreement with the Fair Work Ombudsman?

The Fair Work Commission has issued a statement examining CW Retail Services’ compliance with its agreement with the Ombudsman, noting that the discount giant has back paid employees and improved its payroll practices following the three-year compliance partnership.

The group voluntarily entered into a Compliance Deed in 2016, to improve workplace compliance across the franchise network after it was found not to have paid staff for compulsory online training undertaken by staff outside their normal working hours.

This came to light when FWO audits and the company’s own review found non-compliance with workplace laws across the discounter’s network of pharmacies.

CW Retail Services Pty Ltd had issued instructions to the owners of individual businesses telling them to pay their staff for the training – and instructing them that training should take place during working hours – it conceded that there was the potential for non-payment to have erroneously occurred within individual businesses.

In 2016 it was reported that following a review of all online training, 294 stores operating under the Chemist Warehouse brand initiated back payment to 5,976 employees totalling $3,569,212.10.

The retailer then entered the partnership with Fair Work.

This committed it to take steps including improving resources, training and processes, setting up an employment relations hotline and email service for staff within the franchise network to enable them to raise concerns, and arranging independent audits to assess franchisee compliance with Australian workplace laws and applicable fair work instruments.

Fair Work notes that Chemist Warehouse conducted workplace law training for more than 560 owners, supervisors and managers of franchisee business.

It also updated its staff on-boarding system and put in place a new payroll system, Fair Work says.

Chemist Warehouse resolved 342 individual queries or complaints from employees, with $99,062.98 paid to 118 employees across the three-year partnership.

Most of these matters – 88% – were raised in the first year and 69% of all matters related to the training payment issue, notes Fair Work.

In addition, Chemist Warehouse engaged an independent law firm to complete the annual audits of its franchise network to ensure staff were correctly paid.

These audits identified underpayments of $11,539 for 820 out of 2,521 employees audited, with most underpaid workers across each audit owed less than $1. All workers have been back-paid, Fair Work says.

The largest underpayments (85% of the total recovered) were identified in the first of the three audits, with $459 needing to be back paid as a result of last year’s final audit of more than 300 Chemist Warehouse stores.

Fair Work Ombudsman Sandra Parker said that Chemist Warehouse had implemented processes to resolve workplace disputes efficiently across its network and educated franchisees on their lawful obligations under the Fair Work Act.

“The company will continue to work with its independent auditor post the expiry of the deed with the FWO,” Ms Parker said.

“Franchises are a priority sector for the FWO and we urge all franchisor head offices to prioritise compliance with workplace laws or risk breaches that impact their brand and workers.

“Franchisors should be aware that they can now be held responsible for their franchisees’ conduct and may be subject to enforcement action, court proceedings and penalties if their franchisees have breached the law.”

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