The Fair Work Ombudsman has started legal action in the Federal Court against the company and four subsidiaries, relating to alleged underpayments of more than $1 million.

The regulator is taking action against SRG Limited and its subsidiaries Super Cheap Auto Pty Ltd, Rebel Sport Ltd, SRG Leisure Retail Pty Ltd (trading as BCF and Ray’s Outdoors) and Macpac Retail Pty Ltd.

It is alleged some breaches were “serious contraventions” under the Fair Work Act.

The FWO investigated after SRG Limited disclosed “widespread underpayments of thousands of employees”.

The FWO’s legal action focuses on a sample of 146 of the allegedly underpaid employees across the group. It is alleged that the employees were underpaid a total of approximately $1.14 million for their work between January 2017 and March 2019.

It is alleged that SRG Limited, Super Cheap Auto, SRG Leisure and Rebel knew the overtime contraventions were occurring (or likely occurring) from at least April 2017, but failed to take action to address this until January 2018.

The regulator alleges that most of the underpayments were the result of SRG Limited’s subsidiaries paying salaried employees with annual salaries that failed to cover their minimum lawful entitlements, given they generally performed significant amounts of overtime work.

The FWO alleges underpayments of individual sample employees ranged from small amounts to about $34,500 during the timeframe.

It also alleges that the methodology used by SRG Limited in its remediation program has resulted in only partial back-payment of the sample employees.

Super Retail said it self-reported the issue back in 2018 and apologised to affected workers and made it clear that it was unacceptable and contrary to the company’s values.

As far as the company was concerned the repayments were largely completed and it had reimbursed $52.7 million.

Managing director Anthony Heraghty said it was a regrettable chapter in the company’s history.

“We are sorry for the impact on our team members and today we restate our unreserved apology to each person affected,” Heraghty said.

Fair Work Ombudsman Sandra Parker said keeping large corporate sector employers accountable for any underpayments remained a priority.

“The breaches alleged in this case – inadequate annual salaries for employees stretching across multiple years – have become a persistent issue for businesses across many industries,”  Parker said.

“Every employer should be clear that if annual salaries do not cover all minimum lawful entitlements for all hours actually worked, the results can be substantial back-payment bills, plus the risk of significant court-ordered penalties. Penalties can also be higher for serious contraventions.

“This is also the first court action where the Fair Work Ombudsman has alleged breaches by a holding company for contraventions by its subsidiaries. Holding companies who allegedly knew or reasonably should have known of underpayments within their group will be held to account.”

The regulator alleges that SRG Limited is liable as a holding company for some of the contraventions between 27 October 2017 and 1 January 2018 because it knew or could reasonably be expected to have known, that Super Cheap Auto, SRG Leisure and Rebel would or were likely to underpay set-up workers and retail managers their entitlements to overtime under the General Retail Industry Award.

The FWO is seeking penalties against Super Retail Group Limited and each of the four subsidiaries.

The maximum penalties for the alleged serious contraventions are $630,000 per breach, 10-times the penalties which would ordinarily apply. For the other alleged contraventions, SRG Limited and the four subsidiaries face penalties of up to $63,000 per breach. Holding company liability-related penalties are also up to $63,000 per breach.

The FWO is also seeking court orders for the four subsidiaries to rectify outstanding entitlements allegedly owed to the 146 sample employees.