Flight Centre hit with court case alleging underpayment of workers

  • Federal Court case filed against Flight Centre amid accusations of underpayment.
  • Flight Centre rejects claims, saying company acted correctly, share price drops 11.7% on news.
  • Maurice Blackburn said it hopes the case will act as warning to other companies to fix pay issues.

Flight Centre is under fire after lawyers lodged a claim in Federal Court Friday claiming breach of the Fair Work Act and underpayment of five current and former employees.

Maurice Blackburn Lawyers are claiming Flight Centre failure to pay minimum wages for ordinary hours worked, or overtime, penalty rates, annual leave, rest or meal breaks, at the correct rate.

Giri Sivaraman, Maurice Blackburn employment law principal, is acting for the five applicants and told Business Insider Australia the case is still in its early days and that he hoped it didn’t have to go to court.

“I’m always of the view that an early resolution is good, I spend half my time telling clients not to litigate,” he said.

He said the court action would seek Flight Centre to audit its compliance with the Fair Work Act to ensure all employees, current and former, were paid appropriately during the period under examination.

He said the court action was limited to Flight Centre and was not looking at other companies within the group such as Student Flights.

Flight Centre rejects all the accusations, in a response to Business Insider Australia the company said that “we reject the allegations and will defend our position.”

“The company has categorically denied that some of its people were paid below the minimum award under the previous wage structure,” the company said in a statement.

“If the combination of retainer and commission fell below the minimum applicable award, the company paid its people an additional top-up to ensure earnings reached the appropriate level.”

However, the response from the sharemarket didn’t reflect their confidence, with shares in the group dropping 11.7 per cent since on close Friday from 44.17 to 39.00.

This isn’t the first time there has been issues with staff wages. The ABC reported in 2018 the group had gouged customers and under payed staff.

At the time, the current base wage for travel consultants in Flight Centre stores was $4000 below the minimum wage, with the rest made up by commissions.

Sivaraman said it wouldn’t have come to this if Flight Centre paid wages using a proper system.

“Our response is that you can’t pay under the award and use that risk incentive to try and compensate for paying under the award,” he said.

“We say it’s not only a weird system and an unlawful system, you can’t months after say sorry we didn’t pay you the award so here’s a top up.”

Sheri MacKenzie, one of the five employees in the case, no longer works at Flight Centre because of the “bullying and intimidation that was going on” during her time there.

“Most people probably don’t want to say anything in the risk that they’ll lose their job,” she said.

“I’d like to see anyone owed money should be repaid.”

Case should be warning to other companies

In its statement, Maurice Blackburn said it was bringing the case forward with the help of Together Queensland, a branch of the Australian services union.

Alex Scott, State Secretary of Together Queensland, claimed “the entrenched sales culture at Flight Centre during the period in question was not unlike practices identified in the Banking Royal Commission.”

“Our members, who were illegally subjected to an extremely stressful working environment over a long period of time, are understandably angry about the way that they have been treated by Flight Centre.”

However, when pressed by Business Insider Australia, Maurice Blackburn’s Giri Sivaraman admitted the comparison was “not the same as charging fees to dead people”.

He said this case would be a test case for many other companies who pay staff under similar systems.

“It’s probably manifest across other employers,” he said.

“I really hope other companies that use antiquated and unlawful pay structures sit up and make a change.”