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Restaurant chain under fire for staff underpayment

Adam Zuchetti
Adam Zuchetti
15 June 2017 2 minute readShare

A franchised restaurant chain is facing a new round of legal action with allegations teenage and foreign workers have been underpaid by nearly $28,000.

The Fair Work Ombudsman issued a statement saying it began further legal action against Western Australian chain Han’s Cafe, alleging the underpayment affected a total of 22 employees at the Rockingham outlet.

The alleged underpayment covers a 12-month period between December 2014 and the same month in 2015, amounting to $27,920.

According to the Fair Work Ombudsman, this latest round of legal action comes just a month after the operator of the Han’s Cafe chain and two associated companies were forced to pay $37,500 in penalties for record keeping that was deemed so poor, the Fair Work Ombudsman was unable to determine the full extent of employee underpayments.

Han’s Cafe is accused of paying the affected employees below minimum rates for ordinary hours, weekends, public holidays and late night work, as well as on split-shift allowances. Additionally, the company is accused of contravening payslip laws.

The Fair Work Ombudsman’s 2015-16 annual report shows the agency recovered more than $27.3 million in underpaid wages and entitlements for 11,158 workers, the bulk of which as a result of education and dispute resolution.

This was the result of just under 30,000 instances of alleged non-compliance.

Wage underpayment has been a high-profile issue for employers in recent months, with SMEs, franchises, household name brands and even MasterChef judge George Calombaris caught up in the quagmire.

“We’re seeing a lot of franchisees and franchisors having issues with the Fair Work Ombudsman for underpaying staff and not paying penalty rates. We’ve got the penalty rates case before the Fair Work Commission. So there’s general confusion about our obligations, where do I find them, where do I go for help? And a lot of employers don’t know, and they don’t know because quite frankly, it’s really bloody hard,” explains specialist SME lawyer Mark Gardiner of Teddington Legal.

As Mark explains on the My Business Podcast, the Fair Work Act effectively brought “hundreds, if not thousands” of state awards into a nationalised set of employment awards.

He says this should be the first place any employer should look at when hiring new employees.

“What employers need to do first and foremost is when they’re employing staff, determine if the staff they’re employing are covered by an award. And if there are award obligations, they must comply with,” he says.

Mark explains that employers can, as celebrity chef Mr Calombaris claimed, be caught out underpaying staff unintentionally as well as deliberately.

“His company was discovered to have underpaid its staff by $2 million over a number of years. Now that was inadvertent it seems, and I’m not suggesting George went out of his way to do any harm at all to his staff. It was just complicated, and they got it wrong. So it’s important to understand what the obligations are.”

He advises speaking with an employment lawyer or at the very least going through the Fair Work Commission to ensure that your business is meeting award wage requirements.

Mark has loads more insights on employment contracts, unfair dismissal, 457s and more on the My Business Podcast below:

Restaurant chain under fire for staff underpayment
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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