The Fair Work Ombudsman (FWO) revealed that MAdE Entertainment Pty Ltd — which operates Melbourne restaurants The Press Club, Gazi and Hellenic Republic — has now repaid 515 current and former employees a total of $7,832,953 in wages and superannuation.
It identified Mr Calombaris as a founder and current shareholder of the group, and had been its director for 10 years until he stood down last year.
In a public statement issued on Thursday (18 July), the workplace regulator said that MAdE discovered and voluntarily disclosed the discovery of errors in how it had paid its employees at the five restaurants.
But that initially reported figure has since risen to the current $7.8 million bill after the FWO launched an investigation and expanded its scope to include some of the restaurants operated by Jimmy Grants Pty Ltd, an offshoot of the MAdE group of companies and controlled by the same directors and shareholders.
That investigation, the regulator said, identified more underpayments, which it said “occurred because they failed to correctly apply annualised salary arrangements for some staff, including by failing to conduct annual reconciliations to check that workers on annual salary arrangements were paid for overtime and penalty rate hours worked”.
Inspectors also found that both MAdE and some of the Jimmy Grants outlets had not correctly classified some staff as casual employees under the Restaurant Industry Award. That led to a further nine employees at Jimmy Grants being reimbursed $16,371.
The underpayments occurred between 2011 and 2017, according to the FWO.
MAdE has now entered a court-enforceable undertaking with the FWO to lock in changes to wages and record-keeping practices in a bid to avoid a recurrence of underpayments.
A $200,000 “contribution payment” — reported by some media as a fine — will also be made to the federal government’s Consolidated Revenue Fund, and MAdE will also be required to have its pay and conditions checked by external auditors each year until 2022, at its own expense.
Mr Calombaris to speak at events about compliance
An additional, less orthodox, aspect of the undertaking requires Mr Calombaris to speak at industry engagements on the issue of workplace compliance, as a means of industry education.
A spokesperson for the FWO confirmed to My Business that this particular aspect was a first for the agency.
“The court-enforceable undertaking (EU) states at Attachment B that George Calombaris, on behalf of MAdE Establishment, is to participate in a minimum of seven agreed speaking engagements,” they said.
“This is the first Fair Work Ombudsman EU to include such speaking engagement clauses.”
Ombudsman Sandra Parker said the situation is a wake-up call for all employers.
“MAdE’s massive back-payment bill should serve as a warning to all employers that if they don’t get workplace compliance right from the beginning, they can spend years cleaning up the mess,” she said.
“The Fair Work Ombudsman is cracking down on underpayments in the fast food, restaurant and café sector, and we urge employers to check if they are paying their staff correctly.”
Underpayments discovered after change of ownership
Responding to the announcement in a written statement, MAdE Establishment said that underpayments were discovered after a change in ownership and management, when a review was undertaken in early 2017.
“After an investigation, the FWO confirmed MAdE’s finding that employees had been incorrectly classified and underpaid due to incorrect processes and failures within its payroll and human resources functions,” it said.
The group’s current CEO, Leigh Small, said that all existing staff are now correctly classified, and that new procedures had been implemented to “further strengthen the group’s reputation as an employer of choice”.
“All current MAdE team members have been correctly classified, and all entitlements verified as owing to current and past employees have been calculated and paid, with a handful of claims now being finalised,” he said.
“Since changing ownership, we have introduced a new CEO, a new People and Culture Director, and new processes and procedures to ensure we’re not only complying with workplace relations laws but [also] actively promoting a culture of employee wellbeing.
“We look forward to continuing to grow our business and providing all team members with the tools, education and environment to succeed in their careers for years to come.”
In the statement, Mr Calombaris apologised to all of the affected employees and committed to influencing positive change within the wider hospitality sector.
“We apologise to all our affected team members, past and present — as it is our people that make our restaurants great, and it is our priority to ensure all of our employees feel respected, rewarded and supported in their roles,” he said.
“We are committed to acting as a force for change in the industry and leading by example when it comes to building and promoting supportive, healthy and compliant hospitality workplaces.”