Star Entertainment Admits $13M Wage Underpayments

Star Entertainment Group openly admitted that it has made underpayments to approximately 2,200 staff worth a combined $13 million.

Star Entertainment finds itself in hot water after admitting wage underpayments to approximately 2,200 staff. Star made underpayments worth $13 million over the course of six years. The Australian casino giant promised to make it right during the first half of 2022.

Star announced the massive underpayments in addition to plans to pay those underpayments back in a statement to the Australian Securities Exchange.

“The Star has identified the underpayment of wages to certain current and former salaried team members and has commenced a process to fully remediate all impacted team members. The underpayment has been identified through a six-year retrospective wage review of salaried team members underpinned by modern awards. In some cases, team members were found to not be “better off overall” as the annual salary was not sufficient to compensate the team member for their equivalent award entitlements such as overtime and penalty rates.

“Over the review period, the number of team members on annualised salaries underpinned by an award is approximately 2,200 and The Star plans to take a provision of approximately $13 million in its H1 FY2022 accounts for the expected cost of remediation. This provision includes estimated back payments, interest and superannuation contributions, where applicable.”

Star owes an average of $5,909 to each of the affected employees. Those are underpayments of a shade under $985 per person over the past six years.

Star’s Multi-Millionaire CEO Apologises for Massive Underpayments

Star’s Chief Executive Officer, Matt Bekier, is one employee not subject to the underpayments scandal. Bekier received more than $3.6 million in salaries and bonuses during the last financial year. Bekier issed a brief apology at the statement’s end.

“We apologise to any team member impacted by the payment shortfall and we are committed to doing the right thing by acting transparently. Our priority is to address this issue and to ensure that it does not happen again.”

The Star informed the Fair Work Ombudsman and the United Workers Union about the underpayments. In addition, the casino notes the underpayments amount to only 0.4% of the $3.3 billion it paid staff during this time. However, any underpayments are unacceptable.

The casino group cited overtime payments as the main culprit for the shortfall. Star is improving the payment processes and systems it currently has. It hopes to ensure underpayments does not happen again.

Star is not the first Australian corporation to announce underpayments to workers. Others include Qantas, Coles, Woolworths, the Australian Broadcasting Corporation, and the Commonwealth Bank.

Star Expects a $75 Million Loss

News of underpayments came after Star revealed it expects a H1 FY2022 loss between $73 million and $75 million. Star blamed a tough trading period blighted by Delta and Omnicron COVID-19 variants. Investors learn of the exact figure on February 17, 2022.

The company enjoyed profitable years in 2018 ($0.15 billion), 2019 ($0.20 billion), and 2021 ($0.06 billion). However, it lost $0.09 billion in 2020.

“The Star will release its 1H FY2022 financial results on February 17, 2022. As previously disclosed, COVID-19 related property shutdowns, operating restrictions, and border closures have materially impacted earnings.

“The prevalence of the Omnicron variant of COVID-19 impacted trading results in December and January, with a peak in mid-January. This impact has subsequently eased and trading continues to progressively improve.”

Financial Irregularities Investigation Continues

The New South Wales Independent Liquor & Gaming Authority (ILGA) is currently investigating possible Star financial irregularities, including money laundering. AUSTRAC is also investigating Star Sydney. AUSTRAC recently expanded the scope of the investigation to other Star properties. Both ILGA and AUSTRAC will, no doubt, be very interested in these latest developments.

Strangely, Star’s share price initially dipped to a six-day low as a result of the negative press. However, it recovered handsomely from $3.56 per share to $3.72 per share as traded ended.