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Degani cafe slapped with $140k penalty

Degani cafe slapped with $140k penalty

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Falsified wage records have seen the former operator of a Degani franchise handed penalties of more than $140,000 in court, who was lambasted for blaming everyone but himself.

According to the Fair Work Ombudsman (FWO), wage underpayments were discovered at the Degani Greensborough outlet in Melbourne’s north-east during what it called “proactive audit activity”.

The regulator said that the franchise owner SHMAP Group and its director, Sajid Amin, had underpaid 15 employees by $12,506 during a nine-week period in 2016, having been paid flat hourly rates of as low as $12. The workers have since been reimbursed in full.

Among the employees were four teenagers and four migrant workers from Malaysia and China.

Both Mr Amin and SHMAP Group admitted to the underpayments in the Federal Circuit Court.

Ombudsman Sandra Parker said inspectors were hampered by being given falsified wage records, and that employees had not been issued with pay slips.

“We took this company to court because the conduct involved two of the most vulnerable groups in our workforce – young workers and workers from non-English speaking backgrounds,” Ms Parker said.

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“These groups are at risk as they may not seek help because of language and cultural barriers, concerns about visa status, or they may be unaware of their workplace rights.”

She added: “We will take enforcement action against any business that deliberately contravenes Australia’s workplace laws.”

The FWO noted the judge’s criticism of the conduct before him, who said that Mr Amin had “roundly sought to blame everyone but himself”.

“Not only does the evidence suggest that some endeavours were made to educate him, it is for him as the employer, and for the employer itself through him, properly to inform themselves, particularly when they were on clear notice that obligations were extant,” he said.

He fined the company $117,810, while Mr Amin was personally hit with a $23,562 penalty and ordered to undertake employer training through the Ombudsman’s Online Learning Centre.

Mr Amin has been contacted for comment.

 

Employers were urged by the FWO to ensure they are fully aware of their obligations by perusing the Fair Work website or calling its Infoline on 13 13 94. It also operates a free interpreter service via 13 14 50.

Business 'no longer own a Degani cafe'

Darren Lane, CEO of Degani, told My Business that as the franchisor, the company has been working hard to rectify the situation.

Back to 2016, Fair Work identified that the operators of the Greensborough Degani were not doing the right thing. They advised us of the issue and we have worked with Fair Work ever since to correct that situation,” said Mr Lane.

We were aware that the process had gone to court in October and of the outcome.

He said that any other issues identified by the 2016 audit have been resolved by the store owners in full co-operation with the FWO.

Degani has more than 50 cafes across Melbourne, each owned by franchisees and licensees who are honest, hard-working and passionate hospitality professionals. These are people who value their staff, pay them the correct wages and that I'm proud to be associated with,” Mr Lane said.

The Greensborough Franchisees were new to Degani and were trained by our business development team on the correct way to conduct a business and pay fair wages within the award. They chose to ignore this and we have breached that store and they no longer own a Degani café.

Mr Lane also referred to a press statement dated 7 August, 2018, in which he outlined the measures the company has taken in a bid to bolster compliance within its franchise network.

This included:

  • “A significant investment in its operations team, boosting it from four business development managers to seven in order to provide the Degani network with the tools and coaching to assist with all aspects of franchisees’ business, including a Fair Work Compliance health check.
  • Issued each Degani outlet with membership of the Australian Retailers Association, which provides access to legal and human resources advice from industry experts.
  • Provided each cafe owner with the Enable HR wage-management software system, which provides tools and templates for the correct management of rosters, wages and employment processes.
  • Introduced the Deputy Payroll App system and set it up for the relevant award application. Degani has negotiated a group payroll process price for all stores, saving management time while providing a cost-effective way to ensure Fair Work compliance and cost of labour management.
  • Provided all new and existing franchisees with training modules through World Manager software and ARA HR Training Portal, including team management, record keeping and award application. We have the ARA trainers coach and advise each of our Franchisees on the management of HR as part of our new store training programme.
  • Issued alerts of changes to Award conditions through the ARA and directly from Degani’s Support Office.

 

 

Degani cafe slapped with $140k penalty
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