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Compliance report reveals underpayments of more than $44,000

August 28, 2018

By Victoria Hansen and Lindsay Carroll, NRA Legal

The Fair Work Ombudsman (FWO) released its findings on Degani Bakery and Café (Degani) Compliance Activity (Activity) last week, finding non-compliance at 15 out of 16 Degani outlets operating under either a licensee or franchisee arrangement with Degani Australia Pty Ltd.

Background

The FWO commenced the Activity in 2016 in response to a high number of requests for assistance from workers who were alleging underpayment by Degani, whose outlets range from small kiosks and espresso bar style stores to larger cafes and restaurants.

The Activity involved audits of 14 Degani outlets in and around Melbourne and 2 in Rockhampton.

On 1 February 2018, the FWO reported that underpayments of almost $10,000 were found at one of the outlets, who agreed to back pay workers in full and overhaul their business practices under the terms of an Enforceable Undertaking which they entered into with the FWO. Breaching the terms of an Enforceable Undertaking is grounds for litigation.

The company was found to have breached the Restaurant Industry Award 2010 (Award) which covered their workers, by failing to provide unpaid meal breaks for workers who worked more than 5 hours, pay annual leave loading and roster part-time employees for at least three consecutive hours.

The Company had to apologise to workers, display notices on its website detailing its breaches in the workplace and commission professional audits of its compliance with workplace laws whilst rectifying any breaches.  They also had to provide training to all management on workplace laws and provide information to all their employees.

Further, on 26 February 2018, the FWO reported that an operator of a Degani café in Melbourne was facing court after it was alleged he created false or misleading records to conceal $12,506 of underpayments to 15 employees. The company, which holds a franchise agreement for the outlet, now faces maximum penalties of up to $54,000 per contravention whilst the operator faces maximum penalties of up to $10,800 per contravention. A hearing is scheduled for 1 October 2018.

The outcome

The Activity found that of the 15 outlets found to be non-compliant, eight were non-compliant with record keeping, nine were non-compliant with weekend and public holiday rates, eight were non-compliant with base rate of pay, one provided false or misleading records, and one failed to comply with a Notice to Produce records. 

This resulted in the FWO issuing 10 formal cautions, eight compliance notices and five infringement notices or on-the-spot-fines totalling $5,400 in penalties.

In total, $44,165 was recovered by the FWO for 86 underpaid workers.

What this means for you

Franchisors can now be held liable for workplace breaches by businesses in their network. Individuals face fines of up to $10,800 per contravention whilst companies face up to $54,000 per contravention. It is therefore important that you understand your obligations and comply with workplace laws.

NRA’s Fair Work Boot Camp Webinar series starts on Wednesday 5 September. The series of six interactive webinars assist members to monitor compliance with the Fair Work regime and will provide practical tips for employers to navigate workplace laws. Details can be found at https://members.nra.net.au/events/fair-work-boot-camp/

The legal team at NRA are also well equipped and experienced to conduct audits for its members on a fee for service basis to ensure they are complying with workplace laws. Please contact a member of the team today if you wish to discuss.

To find out more information and speak to one of our workplace advisors, call the NRA today on 1800 RETAIL (738 245).


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