The Australian arm of an international fast food chain has repaid more than $1 million in backpay and compensation to hundreds of workers after failing to meet award conditions.
According to the Fair Work Ombudsman (FWO), MOS Burger Australia — the local division of the Japanese burger chain — has now repaid a total of 285 current and former employees of its Queensland outlets a total of $1.12 million in previously unpaid wages and other entitlements.
The regulator said that all of the workers had been underpaid while working at six stores across Brisbane and the Gold Coast, over a seven-year period between 2011 and 2018.
Employees were found to have been paid low flat rates in breach of the Fast Food Industry Award 2010, and some had been misclassified as part-time employees rather than casuals. That meant that both hourly rates, penalty rates as well as casual loading had not been paid.
Most of the employees were either migrants or young people, the FWO said. Underpayments had a diverse range in size, from $18 up to $31,975.
These underpayments were discovered as part of an investigation by the FWO, which is actively targeting poor compliance rates among the restaurant, café and fast food sector.
MOS Burger has since reimbursed all employees for unpaid wages and superannuation as well as paid an additional 7 per cent as compensation.
However, when asked whether any leave entitlements paid to the employees misclassified as part-timers, who would not have received the entitlements as casuals, a spokesperson for the FWO said that no such consideration had been made.
“Back-payments to casuals were not discounted by any leave paid,” the spokesperson told My Business.
No punitive action in recognition of prompt response
As Ombudsman Sandra Parker outlined at the National Small Business Summit in August, the FWO is looking to use “non-punitive” compliance notices and court-enforceable undertakings more frequently, in recognition of honest mistakes and active co-operation in addressing past mistakes.
She said this renewed focus would help to promote education and a compliance culture, suggesting that penalties and legal action would be reserved for more serious and deliberate breaches of workplace laws.
And it was in this spirit that MOS Burger was offered the chance to enter a court-enforceable undertaking.
“We considered that a court-enforceable undertaking was an appropriate enforcement tool, as the company conducted a comprehensive audit of its pay records from when it commenced trading in Australia, fully back-paid workers and overhauled its processes to comply with workplace laws,” Ms Parker said, acknowledging the company’s prompt action in addressing the FWO’s concerns.
Under the terms of the order, MOS Burger will be required to have external auditors review its pay and conditions in both 2019 and 2020, register with the FWO’s My Account portal and ensure all senior managers and payroll/HR/recruitment staff undergo training on workplace laws.
“Court-enforceable undertakings are serious instruments with extensive commitments from companies. We will monitor compliance with each commitment and won’t hesitate to take court action if they are not upheld. This matter is a warning to all employers that if they don’t get workplace compliance right from the beginning, they can be left with extensive and expensive consequences.
“The Fair Work Ombudsman is cracking down on underpayments in the fast food, restaurant and café sector, and any employees with concerns about their pay should contact us.”
‘Continued commitment to compliance’: MOS Burger
In a statement posted on its website, MOS Burger said that it had offered the enforceable undertaking, which was accepted by FWO, to demonstrate its “ongoing commitment to making sure its employees receive the correct entitlements under the Fair Work Act and Modern Awards that apply to MOS Burger and its employees”.
It confirmed that employee entitlements have been back-paid in full.
“MOS Burger takes its obligations under the Fair Work Act seriously, and the enforceable undertaking underpins the ongoing commitment MOS Burger brings to making sure its human resources processes and payroll systems meet the needs of the Modern Award system,” the business said.
The statement did not include an apology to affected employees.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.