Eagers Automotive Limited Companies Back-Pay $16 Million and Sign Enforceable Undertaking

 

Australia’s largest car dealership business, Eagers Automotive Limited (EAL), has back-paid over $16 million, including interest and superannuation, to staff underpaid by five of its subsidiaries. These subsidiaries have also signed an Enforceable Undertaking (EU) with the Fair Work Ombudsman.

EAL, formerly known as AP Eagers, is an Australian public company operating automotive dealerships across all Australian states and territories, and in New Zealand. The five subsidiaries involved in the EU were acquired in 2019.

The underpaid employees were primarily based in Newcastle, Sydney, Brisbane, Melbourne, and Perth. EAL’s dealerships sell nearly all major vehicle brands, including Toyota, Ford, Mercedes-Benz, Kia, Volkswagen, and Hyundai.

In 2019, AP Eagers acquired Automotive Holdings Group Limited (AHG), the holding company for 19 businesses. This acquisition made EAL Australia’s largest car dealership business, with an annual revenue of $9.85 billion.

EAL self-reported the underpayments to the regulator in June 2021 after discovering anomalies during a payroll review following the acquisition. The review revealed that EAL subsidiaries had failed to pay in line with award progression, incorrectly classified employees, did not pay overtime, annual leave, annual leave loading, or for training, and failed to pay employees when sent home due to no work. Unauthorized deductions were also made.

Eagers Automotive Limited has back-paid $16.2 million to 13,277 current and former employees, including $12.1 million in wages, $1.1 million in superannuation, and $3 million in interest. The underpayments occurred between 2013 and 2021. Additionally, $1.9 million, including interest and superannuation, was back-paid to 701 current and former employees of 14 other subsidiary companies outside the EU requirements.

Approximately $200,000 is still owed to employees who cannot be located. Under the EU, payments must be completed within 120 days or be paid into the Fair Work Ombudsman’s unclaimed monies fund.

The employees affected by these breaches were full-time, part-time, and casual staff working across car and truck dealerships in finance, car sales, parts sales, and servicing roles.

The EU is with the five largest companies: AHG Newcastle Pty Ltd, AHG Services NSW Pty Ltd, AHG Services Qld Pty Ltd, AHG Services Vic Pty Ltd, and AHG Services WA Pty Ltd. These companies must also make a combined $450,000 contrition payment to the Commonwealth’s Consolidated Revenue Fund.

Fair Work Ombudsman Anna Booth stated that the EU was appropriate as the underpayments were largely due to past non-compliance identified by EAL following the acquisition of previously separate entities. The companies have cooperated with the FWO’s investigation and have committed to rectifying the underpayments and preventing future issues.

Under the EU, EAL’s subsidiaries have committed to implementing stringent measures to ensure correct payment of workers. These measures include commissioning an independent auditor to verify lawful entitlements are met.

Ms. Booth emphasized the importance of compliance with awards and enterprise agreements, noting that EAL’s breaches resulted from inadequate time and attendance systems, reliance on manual paper timesheets, a decentralized payroll system, and a lack of awareness of workers’ legal entitlements. She praised EAL for proactively identifying and rectifying issues after the acquisition.

Individual back-payments to employees ranged from less than $1 to $69,298, with an average back-payment of approximately $1,217, including superannuation and interest. The entitlements were owed under various awards and enterprise agreements, as well as the Fair Work Act.

The EU also requires the five companies to engage an independent provider to operate an employee hotline for three months at their own cost, inform affected staff about the EU, and provide evidence to the FWO of mechanisms in place to identify and rectify compliance issues in future acquisitions.

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