ELEANOR HALL: One of Australia's biggest fast food chains has been
caught out underpaying more than a thousand of its workers.
The Fair Work Ombudsman has ordered Red Rooster to repay almost $650,000 of back-pay to short-changed employees.
As business reporter Pat McGrath.
(Sound of Rolling Stones song Little Red Rooster)
PAT MCGRATH: As if slaving over a hot chicken-roasting oven wasn't tough enough, thousands of Red Rooster workers have another reason for getting the blues.
About five years ago, possibly half of the 7,000 people then working at the company's 360 outlets around the country were underpaid almost $650,000.
Russell Jacob heads the taskforce set up by the Fair Work Ombudsman after it received complaints about the underpayments.
RUSSELL JACOB: What should have occurred was that they were being paid a base rate of pay based on the agreement but in fact they should have been paid under a slightly higher rate under the food industry award.
And so what the audit highlighted was the gap between the base rate that was being paid through the 2009 agreement and what should have been paid by the industry award.
PAT MCGRATH: So why were they being paid a different rate?
RUSSELL JACOB: Well, I suppose that's a matter for Red Rooster to identify, but again, I don't think the intention was to deliberately underpay or misdirect the payment to the workers.
I think it just occurred as a result of again, as I mentioned previously, the misinterpretation of the agreement.
Natalie James, the Fair Work Ombudsman, has commended Red Rooster for working with her office to make sure that the underpayments are rectified, and also moving forward for Red Rooster to make sure that this doesn't occur again.
And I think through the deed, Red Rooster have actually acknowledged that there was an error and they've taken, we think, quite reasonable steps to repay everyone.
PAT MCGRATH: So, and that's a reason to not go into detail about what actually happened? It sounds like the ombudsman doesn't really want to give detail about what exactly went wrong.
RUSSELL JACOB: Well, no sorry, definitely not trying to avoid the question.
All I'm suggesting is that there appears to be a misinterpretation with the 2009 agreement and in fact they should have been, for want of a better word, responsive to the fast food industry award of 2010 and they weren't.
So that's where the error occurred.
PAT MCGRATH: Joe de Bruyn is the national secretary of the SDA, the union that represents Red Rooster workers and negotiated their 2009 enterprise agreement with franchise owners.
He says the underpayments mostly occurred when new owners took over stores and continued paying new workers on the existing agreement instead of the industry award.
JOE DEBRUYN: Some would have been overpayments. Some would have been underpayments. And of course the Fair Work Ombudsman has picked up the underpayments and said well you have to make good to these employees for the extent that they have been underpaid.
And because there is rapid turnover of employment within fast food companies, a number of new employees that are caught up in this is likely to be relatively large.
PAT MCGRATH: So, how do franchisees avoid this? This is a big industry, this must happen all the time?
JOE DEBRUYN: It does happen all the time, and the only way to avoid it is for each new franchisee, when they take over a business, whether it's from the parent company or from another franchisee, to immediately do a new EBA which enables them then through that new EBA to pay the rates to both existing and to new employees over time.
ELEANOR HALL: That's union national secretary for the SDA Joe De Bruyn, ending that report from Pat McGrath.