You may have read this week that the national chain Bakers Delight is facing legal action after 142 members of their staff at three outlets across Hobart were allegedly underpaid 1.25 million dollars. With a recent increase by the Fair Work Ombudsman to the minimum pay rates across all awards, it is crucial that you as a business review the awards your employees are currently working under in line with their Employment Agreement, and ensure all rates of pay are understood and being paid correctly within your business systems.
Unfortunately here in Australia we see this situation often and it is not acceptable. In this particular case, the Fair Work Ombudsman alleges to the Federal Court that Bakers Delight Holdings, the franchisor of the chain is liable for $643,162 of the underpayments taking place between February 2019 (when they allegedly became aware of the underpayments to many younger workers) and October 2020. The Ombudsman believes the company did not take reasonable steps to prevent the situation.
The Ombudsman will also take legal action against the couple who own and manage the stores for the alleged underpayments taking place from July 2017, and it is noted all underpayments remain outstanding.
The Ombudsman claims staff were underpaid entitlements including minimum wages, weekend and public holiday penalty rates and had money unlawfully deducted from their termination pay. Many of the workers were as young as 14 years old and four were visa holders.
The Franchisor is strongly disagreeing with the Ombudsman’s interpretation of the legislation and believes it carried out everything reasonable to prevent contraventions.
The ombudsman alleges an audit commissioned by the franchisor in February 2019 has noted underpayments and non-compliance issues across the stores.
The first hearing for this particular Federal Court case is expected in late July, with the Franchisor noting the company’s offer to pay employees the full amount of back pay allegedly owed has been rejected by the ombudsman.
This case is a timely reminder that failing to pay minimum wages including any applicable penalty rates and allowances is not adhering to the fair work act and is therefore unlawful to your employees. Non-compliance will ensure you are legally brought forward for the business actions.
The Team at AHR can assist you to ensure your employees are being paid under the correct Award and Award Minimum Pay Rate. We will also work with you to ensure your staff are working to an Employment Agreement and Position Description that correctly reflects their award and position rate to ensure matters such as this one will never take place in your workplace.