National tyre and wheel retailer Beaurepairs is burning rubber to correct an automated payroll miscalculation that has left 3700 current and former staff underpaid or overpaid, saying it will shell out $1.8 million in owed back pay and loadings.
The Goodyear subsidiary went on the front foot over the system SNAFU on Wednesday, issuing an extensive mea culpa and commitment to cough-up quickly.
Beaurepaires said it discovered the error during a review of “its payroll system to determine whether the system was consistent with the Vehicle Manufacturing, Repair, Services and Retail Award 2010”.
It wasn’t: garbage in, garbage out.
“Unfortunately, our payroll review identified several errors which have resulted in instances of under or over-paying some of our weekly-paid Retail Associates. These errors appear to be caused by our failure to appropriately interpret the award in relation to overtime and annual leave loading for shift workers,” said Scott Bennett, Beaurepaires director of retail operations.
But there’s a catch and it’s a big one.
Because the error went undetected for almost a decade, the scale of the clean-up – especially the amount of data that needs to be pulled and corrected – could well dwarf the cost of the actual back pay now being prepared for short-changed staff.
“We have undertaken a full review of payments made to weekly-paid Retail Associates covered by the Award during their employment with us since 2010. It has taken time to work through these corrections, given the size of our workforce and the sheer volume of data that has had to be extracted, analysed and verified,” Bennett said.
“We have been working with external experts to ensure the analysis was completed as quickly and accurately as possible. Since we discovered these issues, our priority has been to ensure that we understand what happened, how the errors occurred and that we correctly compensate our Retail Associates, now and in the future.”
The good news for former employees overpaid is that it’s unlikely the company will pursue them for the overpayments, mostly out of goodwill but also because recovery would be a financial and logistical nightmare.
Getting the owed dough back to former staff is also a major challenge with Beaurepaires standing up a remediation hotline (1300 47 33 78), dedicated support email (email@example.com) and chatbots plus FAQ's on its website.
While it’s not yet clear what payroll application Beaurepaires was or is using, the incident has again highlighted the fragility of hand-coding interpretations of changes to complex industrial instruments like awards and enterprise bargaining agreements.
It’s not just a matter of getting the money owed to staff. The correction in arrears can have downstream consequences for social security payments, tax and other income related compliance measures.
For example, a change to the declared annual earnings of an employee could, if pursued, potentially affect tax brackets and create a welfare overpayment.
“There could be an impact to your tax, HECS/HELP or Centrelink/Child Support. As each person has specific circumstances, we are not able to offer advice in this area. We recommend that you seek independent financial advice should you have any further questions,” Beaurepaires said in a statement to affected staff.
On the bright side, the company says it will pay interest of 5 percent a year on owed wages with the superannuation contribution put at 9.5 percent and interest on the latter paid at 8.5 percent.
The company will also fork out for the full nine years as applicable rather than just the last six it is legally liable for.
“Paying our associates accurately is one of the most fundamental responsibilities of our business. We know it is of critical importance to our people, and also to the integrity and trust that Beaurepaires stands for. We want to be very clear in stating that this failure is completely unacceptable. We take full responsibility for addressing the issue as quickly and transparently as possible,” Bennett said.
“Not paying our Associates correctly is completely unacceptable and we take full and unreserved responsibility for this. We have learned from our mistakes and are applying the lessons to improve our process and make sure such failures cannot happen again.”