Fair Work Ombudsman launches action against Toys “R” Us over alleged underpayments

The Fair Work Ombudsman has launched action in the Federal Magistrate’s Court in Sydney against giant toy retailer Toys “R” US, alleging the company has underpaid 700 young workers.

The Ombudsman alleges hundreds of the company’s workplace agreements were invalid because they failed either the Fairness test or No Disadvantage test.

The watchdog claims that insufficient pay rates contained in the invalid workplace agreements resulted in Toys“R”Us underpaying more than 700 employees for various periods between 2007 and 2009.

Many of the workers who are alleged to have been underpaid were under the age of 18.

The underpayments are alleged to have centred on entailments including the minimum casual hourly rate and penalty rates for weekend, public holiday and night shifts.

Toys “R” Us finally back paid the workers in March 2009 a total of $445,000, after repeated demands. But the Ombudsman alleges these repayments were not made in the time frame required by law.

The Fair Work Ombudsman has also alleged that Toys“R”Us failed to follow correct procedures when lodging many of its workplace agreements, with questions raised over how the agreements had to be signed, approved by the employer and employee, dated, witnessed and lodged.

In total, the Ombudsman has accused the company of more than 20 breaches of workplace laws. It faces a maximum penalty of $33,000 per breach

Acting Fair Work Ombudsman Natalie James said in a statement the amount of money and number of breaches involved in the case forced the watchdog to prosecute the toy retailer.

“Underpaying young workers is a particularly serious matter,” she said.

The case is listed for a directions hearing on February 1.

A spokesperson for Toys “R” Us said the company’s management team brought the breaches to the attention of the Ombudsman in December 2008 and has been working the agency to ensure its employees have been repaid and put onto a new agreement.

The spokesperson denied the company was disappointed the Ombudsman had gone public.

“I think what we are satisfied with is that we have taken care of our employees, which is our priority.”