Wage watchdog savage, new franchisor laws

Posted by AFN Staff Writers on 8th August 2018

CAFÉ’S, restaurants and takeaway food outlets breaching minimum wage and penalty-rate compliance remain firmly in the sights of authorities, and recent law changes mean franchisors can now be held liable for their networks.

The latest business in breach, risking customer backlash, is the franchise-model Degani Bakery and Café with 80 outlets.

Following a Fair Work Ombudsman audit of 14 Degani outlets in Melbourne and two in Rockhampton (Qld) just one was found to be compliant with workplace laws, the ombudsman said this week.

The audits resulted in the FWO recovering $44,000 for 86 underpaid workers and issuing:

  • 10 formal cautions;
  • 8 compliance notices; and
  • 5 infringement notices (on-the-spot fines).

Of the 15 stores found to be non-compliant:

  • 8 were non-compliant with record-keeping
  • 9 were non-compliant with weekend and public holiday penalty rates
  • 8 were non-compliant with base rate of pay
  • 1 provided false or misleading records
  • 1 failed to comply with a Notice to Produce records.

In February, the FWO commenced court action against a Degani outlet in Greensborough (Vic) for allegedly using false records to conceal more than $12,000 in underpayments to workers. The matter remains before the court with a hearing scheduled for 1 October 2018.

The report is available at www.fairwork.gov.au

Penalty rates problem

Fair Work Ombudsman Sandra Parker said under or non-payment of penalty rates was the most common issue identified by inspectors, as well as underpayment of base rates of pay.

“We uncovered issues with record-keeping at several Degani outlets that hindered our ability to determine exactly how much back-pay the employees were owed,” Ms Parker said.

“Unfortunately, Degani’s failure to meet basic workplace requirements is common throughout the hospitality industry.”

One in ten disputes resolved by FWO in 2016-17 involved a restaurant, café or takeaway food outlet, and nearly one third of the most serious cases that we take to court involve this sector.

“Recent law changes mean franchisors can now be held liable for workplace breaches by businesses in their networks. This report reinforces the need for industry-wide cultural change and hospitality leaders should work with the FWO to support compliance,” Ms Parker said.

MORE: New minimum wage, how to remain compliant

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Degani Australia

Degani Australia CEO Darren Lane said the company has been co-operating with the FWO since the underpayment issue was first brought to its attention in 2016.

“Since that time, Degani Australia has undertaken a number of steps to minimise the opportunity for underpayment to occur again,” Mr Lane said.

“Degani is working closely with store owners to ensure they meet their obligations for all aspects of their business, including Fair Work obligations.”

Mr Lane said the company is deeply concerned about the issue of staff underpayment across the café industry.

“Degani Australia is committed to protecting the rights of vulnerable workers and recognises its responsibility to have systems in place to ensure accurate recording of working hours and payment of award rates,” Mr Lane said.

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Posted by Degani Australia on Monday, 9 January 2017