“Discrimination against workers on the basis of national extraction or race can be a driver behind workplace exploitation,” Fair Work has said, following massive penalties being slapped on a Crust Pizza franchisee.
According to the Fair Work Ombudsman (FWO), the operators of the Crust outlet in North Hobart had deliberately discriminated against four migrant workers, by paying them much less than Australian workers, in a case first flagged in October 2018.
It said in a statement on Monday (4 November 2019) that QHA Foods Pty Ltd, which operates the franchise, and two of its directors and shareholders who operated the business – Anandh Kumarasamy and Haridas Raghuram – “knew the four workers were entitled to minimum award pay rates but chose to discriminate against them by paying them significantly less than Australian employees”.
Fronting the Federal Circuit Court, the FWO said the company and the two directors had admitted they breached a number of workplace laws, including discrimination on the grounds of race.
They were found to have underpaid one Indian and three Bangladeshi migrants to the tune of $9,926 between January and July 2016, all of whom were in Australia as international students at the time.
The underpayment was the result of a flat hourly rate of $12 being paid, in addition to $1 for each pizza delivery made.
The underpayments came despite the business paying Australian workers considerably higher rates.
The FWO also said that in addition to wage disparity, the migrant workers were also discriminated against by being paid in cash and not being given pay slips, contrary to the Australian workers, and were also required to travel greater distances than their Australian colleagues when making deliveries.
“In contrast, Australian employees at the Crust Pizza outlet were paid higher minimum rates of pay and penalty rates, including being paid penalty rates for weekend and public holiday work and a cents-per-kilometre rate for deliveries,” the regulator said.
Ombudsman Sandra Parker said the case was “particularly concerning” given that both of the directors are themselves migrants from India.
“This matter involved business operators breaching the rights of workers from within their own migrant community,” said Ms Parker.
“Singling out migrant workers for underpayment is unacceptable conduct that will not be tolerated by us or the Court.
“Discrimination against workers on the basis of national extraction or race can be a driver behind workplace exploitation. All employees have the same rights regardless of visa status and we encourage anyone with concerns to contact the Fair Work Ombudsman.”
During its investigations, the FWO said it also discovered inaccuracies in the application of certain award provisions to 10 other employees, leading to a further shortfall of $6,252.
The court issued a penalty of $80,000 against QHA Foods, and a further $12,000 for both of the directors personally.
The case arose after one of the migrant workers lodged a complaint with the FWO. All employees have since been backpaid in full.
This marks the second time that a business has been penalised for discrimination against employees, after the former operator of a hotel in Tasmania was slapped with $211,000 in penalties for discriminating against husband and wife employees on racial grounds.
Crust’s owner Retail Food Group (RFG) was approached for comment.
RFG was one of the primary targets of the Fairness in Franchising inquiry – whose final report was released in March this year – which recommended sweeping investigations of the company by ASIC, the ATO and the ACCC over various suspected non-compliance concerns.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
Ask the Experts: Does automation stack up financially?
By Christopher Overton
Opinion: How bad do things have to get?!
By Adam Zuchetti
Business lessons from the All Blacks
By Steve Stanley