Starbucks signs Enforceable Undertaking, backpays staff $4.5m

Starbucks backpays staff
The coffee chain underpaid staff for overtime. (Source: Bigstock)

The Starbucks Coffee chain in Australia has back-paid staff more than $4.5 million and entered into an Enforceable Undertaking with the Fair Work Ombudsman.

The coffee chain operates under license in Australia. Starbucks Coffee Australia is a subsidiary of the Withers Group, which is in the process of selling its flagship business, 7-Eleven.

Starbucks self-reported its workplace non-compliance in 2020. Most of the underpayments to part-time staff in Sydney, Melbourne, Brisbane and Gold Coast were for overtime hours.

The FWO said Starbucks failure to have written agreements in place which detailed regular working hours led to wages errors.

The underpaid employees included baristas, supervisors and assistant managers.

Starbucks had also underpaid some full-time store managers whose annual salaries didn’t meet minimum Award entitlements because of the overtime and weekend hours worked.

Starbucks cooperation

Fair Work Ombudsman Anna Booth said an EU 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.

“Under the Enforceable Undertaking, Starbucks has committed to implementing stringent measures to ensure workers are paid correctly. These measures include engaging, at the company’s own cost, audits of its compliance with workplace laws over the next two years,” she said.

“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.”

Starbucks has made payments of $4.57 million to 2,427 current and former employees, who were underpaid between 2014 and 2020.

This figure includes more than $4.34 million in wages and entitlements. It also includes at least $180,000 in interest and in excess of $40,000 in superannuation.