Merivale to pay $18 million in underpayment following hospitality class action

Catering and hospitality giant Merivale is to pay out $18 million after settling an underpayment class action that stemmed from allegations it underpaid up to 14,000 of its employees a total of $129 million.

Merivale reached the without-admission settlement in response to allegations that it underpaid the employees by relying on a decade-old WorkChoices agreement that paid below the industry award and was never validly approved at its inception.

Merivale had relied on the agreement to avoid the award’s overtime, weekend, evening and public holiday penalty rates up until 2019.

In some cases, the hospitality union said workers were paid more than 20% below what they would have got under the award.

However, the ‘without-admission’ settlement will see almost half that amount, $8.6 million, go to lawyers and the litigation funder.

A spokesperson for Merivale said it had reached the deal, agreed last month. without admission of any wrongdoing and after four years of protracted litigation.

The spokesperson advised “Merivale strongly denies these allegations and continues to do so.

“In agreeing to the settlement, the parties (and Merivale) sought to end the class action on a commercial basis and avoid the further time and costs of litigation, noting that the class action had already been on foot since December 2019.”

In an agreed statement the parties advised “any alleged failure by Merivale to pay group members in accordance with the award was caused by the erroneous decision of the Workplace Authority in relation to the Merivale agreement, and was not the result of any attempt by Merivale to pay group members anything less than they were entitled to by law.

The deal will mean that the action’s litigation funder, ICP Funding, will get paid $2.5 million for the costs of the class action on top of a $4.4 million commission, representing 25% of the total settlement.

Adero Law will also get paid $1.25 million for deferred legal costs, including a 25% uplift fee, and $500,000 to administer the distribution of the settlement to workers.

About $9.4 million will be left for affected workers, the number of which will depend on how many register to be part of the group by 3rd April.

Image: Merivale Chief Executive Justin Hemmes (right) with Venues NSW Chief Executive Kerrie Mather at the time of Merivale securing the Sydney Cricket Ground catering contract in 2021. Credit: Phil Hillyard.