Chemist Warehouse Underpayment Battle: Workers Underpaid and Overlooked

FinReview Chemist Warehouse Underpayments

The Financial Review highlights the key issue of underpayments in a large retailer. Chemist Warehouse is facing a $10 million backpay bill after the Shop Distributive and Allied Employees Association (SDA) took legal action against four of its South Australian franchisees for allegedly underpaying nine staff while working higher duties. The union identifies that the underpayment claims could affect 350 stores across the country and could have ramifications for 1,000 employees. If the SDA’s claims are upheld after the August trial, it could result in a $600,000 payout in South Australia and up to $10 million nationally.

The SDA alleges that in 2017, Chemist Warehouse directed and paid staff to obtain a certificate III in community pharmacy to perform higher duties such as dispensing medication. The union alleges that from then, the workers were performing at a level 3 classification but that the stores did not then pay them wages in line with this classification. “Being directed to work above your pay grade is not ‘good experience’ or ‘an opportunity’, it’s exploitation and it’s unlawful” SDA SA secretary Josh Peak said. The franchisees have denied the allegations and say that the employees’ principal responsibilities did not include the higher duties.

Chemist Warehouse enjoyed huge profits last year following a spike in sales during the COVID-19 lockdowns and its revenue surpassed $3 billion for the first time. Rumours of a potential ASX float of the private company have not eventuated, with the group still in talks with state pharmacy councils about its business structure. The SDA’s underpayment case was filed last year in the SA Employment Tribunal but mediation recently failed. The parties are now heading to a 10-day trial in August. Chemist Warehouse has stated that it is not a party to the proceedings with the SDA and that the franchisees deny any underpayment allegations.

This legal battle serves as a reminder of the ongoing challenges surrounding fair compensation practices, specifically underpayments and the importance of safeguarding employee rights within major retail chains. The trial’s outcome will not only affect Chemist Warehouse but may also influence employee rights and payroll auditing/compliance practices across the industry.

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May 11, 2023

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