Starbucks comes up $4.5m short for thousands of staff
Young part-timers at 52 outlets missed out on overtime payments for years.
Starbucks has been forced to back pay $4.5 million to more than 2,400 staff after discovering it was failing to honour the Fast Food Industry Award.
Starbucks Coffee Australia, an ASX-listed company, self-reported its non-compliance to the Fair Work Ombudsman in 2020 after a review of its time, attendance and payroll systems, and has entered into an Enforceable Undertaking.
The Fair Work Ombudsman (FWO) said most of the underpayments were the result of Starbucks failing to pay part-time staff in Sydney, Melbourne, Brisbane and the Gold Coast the correct overtime rate under the Fast Food Industry Awards of 2010 and 2020.
The underpaid part-time employees included baristas, supervisors and assistant managers across 52 stores, and many were young.
Starbucks had failed to comply with the award requirement to have written agreements in place specifying the regular workdays and hours that made up each part-time employee’s ordinary hours of work. This meant the company often failed to recognise when they were entitled to overtime.
Some part-time employees were also underpaid on annual leave and public holiday entitlements.
A smaller number of full-time store managers were paid annual salaries that were insufficient to cover their minimum entitlements given the significant amounts of overtime and weekend work they performed.
The FWO said Starbucks had made payments of $4.57 million – including more than $4.34 million in wages and entitlements, more than $180,000 in interest and more than $40,000 in superannuation – to 2,427 current and former employees who were underpaid during 2014–20.
Individual back payments ranged from $20 to $18,574, and the average was $1,883.
The enforceable undertaking required Starbucks to provide evidence to the FWO of its completed back payments by the end of September.
Fair Work Ombudsman Anna Booth said an enforceable undertaking was appropriate because Starbucks had cooperated and demonstrated a strong commitment to rectifying underpayments, including devoting significant resources to engaging independent experts to oversee its rectification.
“Starbucks has committed to implementing stringent measures to ensure workers are paid correctly,” she said. “These measures include engaging, at the company’s own cost, audits of its compliance with workplace laws over the next two years.”
“This matter demonstrates how important it is for employers to place a high priority on their workplace obligations. For Starbucks, a failure to have written agreements in place for part-time staff and a set-and-forget approach to paying some full-time staff on annual salaries resulted in significant underpayments and rectification costs.
“Employers need to be aware that taking enforcement action to protect young workers and improve compliance in the fast food, restaurant and café sector are priorities for the FWO.”
Under the agreement, Starbucks had to make a $150,000 contrition payment to the Commonwealth’s Consolidated Revenue Fund.
Starbucks was also required to provide FWO with evidence of the systems and processes it has put in place to ensure future compliance, commission workplace relations training for payroll and store management staff, write to affected staff to apologise and make corporate governance improvements.
The FWO said the Starbucks outlet at Sydney International Airport was operated by an entity unrelated to Starbucks Coffee Australia and was not involved in the underpayments.
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