Alleged underpayments land fast food outlet in Court


The operators of a Queensland fast food business are set to face the Federal Circuit Court for the alleged underpayment of a former employee.

The Fair Work Ombudsman is taking action against Riddhi Siddhi Pty Ltd, the operator of a fast food outlet trading as Vege Rama and an associated commercial kitchen in Brisbane, along with its director Ruchika Sharma.

It is alleged that the outlet underpaid the employee compared to their entitlements under the Fast Food Industry Award 2010. The employee, a visa holder from Nepal, aged in his 20s at the time of the alleged underpayment, worked as a kitchenhand on a casual basis at the commercial kitchen from April 2018 to August 2019, working between 50 and 60 hours per week.

A Fair Work Inspector issued a Compliance Notice to calculate and back-pay the worker’s entitlements as a result of an investigation but the company has yet to comply with the notice.

It is also alleged the company provided false and misleading records and payslips to Fair Work Inspectors, incorrectly showing the hours worked by the employee and the employee being paid above award wages. Sharma is alleged to be directly involved in these contraventions.

The FWO is seeking penalties against Riddhi Siddhi and Sharma of up to $31,500 and $6300 respectively. For each of the contraventions concerning false records and payslips, the company and Sharma face possible maximum penalties of up to $63,000 and $12,600 respectively.

The regulator is also seeking a court order for the company to take the action required by the Compliance Notice, which includes calculating and rectifying any underpayments in full, plus superannuation and interest.

A directions hearing has been set for 12 February 2021.





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Fast-food outlet to face court over underpayments


A fast-food outlet in Brisbane’s West End is set to face the Federal Circuit Court for alleged underpayments. The Fair Work Ombudsman alleges that SMC Food Truck Pty Ltd underpaid casual employees between October 2018 and February 2020.

The allegation comes on the back of audits made by the FWO of 44 fast food, café and restaurant businesses in the West End food precinct between December 2018 and March 2020.

The inspector believed casual employees had been underpaid their casual, overtime, weekend and public holiday entitlements under the Fast Food Industry Award 2010 and issued a Compliance Notice to the operator as a result.

However, the company, without reasonable excuse, allegedly failed to comply with the Compliance Notice which required it to calculate and back-pay the workers’ entitlements.

In line with the FWO’s proportionate approach to regulation during the COVID-19 pandemic, the FWO made several attempts to secure voluntary compliance before commencing legal action.

The FWO is seeking a penalty against SMC Food Truck, which can amount to $31,500 maximum. The regulator is also seeking a court order for the company to comply with the Compliance Notice, which includes rectifying any underpayments in full, plus superannuation and interest.





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National Library working on rectifying underpayments


After discovering that it underpaid its casual employees, the National Library of Australia is making efforts to correct the matter in conjunction with the Fair Work Ombudsman.

The Federal entity based in Canberra self-reported to the Fair Work Ombudsman earlier this year that it failed to pay casual employees the correct weekend and public holiday penalty rates they were entitled to under the applicable Enterprise Agreements. This came after the National Library identified that it had misunderstood its obligations under the agreements regarding payment of penalty rates to its casual employees over two decades.

As a result, the National Library found that it underpaid 106 current and former employees a total of $245,359 in wages and superannuation between 2000 and April 2020. Individual underpayments range from $12 to $19,997, with 11 employees underpaid $5000 or more. The employees concerned were library assistants whose role included providing assistance to the public in the reading rooms during weekends and public holidays.

As part of the rectification effort, the National Library has corrected more than half of the underpayments. It also entered into an Enforceable Undertaking with the FWO, ensuring that the National Libray will have paid back the owed amounts to every affected employee within the next three months, as well as pay additional interest on all back-payments.

Fair Work Ombudsman Sandra Parker said that an EU was an appropriate enforcement outcome as the National Library of Australia had cooperated with the investigation and demonstrated a strong commitment to rectifying all underpayments.

“Under the Enforceable Undertaking, this entity has committed to stringent measures to comply with the law and protect its workforce. This includes engaging, at its own cost, an expert auditing firm to audit its compliance with workplace laws,” Parker said. “This matter serves as a warning to all public and private sector employers that if you don’t prioritise workplace compliance, you risk underpaying staff on a large scale.”

The National Library is also required by the EU to display an online notice detailing its workplace law breaches, establish workplace relations changes for managerial staff, and provide evidence to the Fair Work Ombudsman that it has developed systems and processes for ensuring compliance in future.





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Deliberate underpayments incur penalties for cafe


The Federal Circuit Court has penalised siblings Stavros and Anastasia Petroulias $33,919 and $29,030 respectively, and imposed a $169,596 penalty against a company they part-own and operate, Malevi Pty Ltd. The penalties are the result of the Fair Work Ombuidsman determining that the pair deliberately underpaid 73 staff members more than $180,000 at a cafe they run in Northcote in Melbourne’s inner-northern suburbs.

During the proceedings, the Fair Work Ombudsman showed that the 73 employees were underpaid $180,641 over a 12-month period between April 2017 and April 2018, with underpayments of individual workers, mostly young migrants, ranging from $31 to $12,315. The underpayments were a result of a failure to pay employees the penalty rates and casual loadings they were entitled to under the Restaurant Industry Award 2010, as well as minimum wage rates for some employees.

The Court found that the company and the Petroulias siblings were aware that they were not meeting their obligations but still deliberately contravened workplace laws and exploited staff by paying flat rates of $18 to $25 an hour.

The Court found they also deliberately contravened adverse action laws by not offering further shifts to an employee who challenged his unlawfully low rates – and then continued to underpay other employees. Record-keeping laws were also breached.

“Employers are on notice that they must pay all workers according to Australia’s lawful minimum pay rates or risk significant financial penalties,” Fair Work Ombudsman Sandra Parker said. “We prioritise matters involving vulnerable workers, especially if we think employers are deliberately breaking the law. We also treat very seriously instances of employers taking any sort of action against an employee in response to them seeking to have their lawful workplace rights respected.”

Judge Riley said the exploitation of vulnerable workers was an aggravating feature of the matter and the operators failed to display genuine contrition.

“I do not accept that the respondents are genuinely contrite. Rather, I consider that they are very sorry that they have been caught, and are facing a substantial penalty,” Judge Riley said.

Judge Riley said that there was a need to impose penalties that would deter the respondents from further contraventions and deter others from similar conduct, saying, “The hospitality industry is notorious for its underpayment of employees, and noncompliance with other industrial obligations”.

The Court ordered Malevi Pty Ltd to commission an independent audit of its wage payment practices and provide the results to the FWO, display a workplace notice detailing workers’ rights, and register with the Fair Work website and complete the courses for employers. The Court also ordered the Petroulias siblings to undertake workplace training.





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7-Eleven repays $173m to workers after some franchisees falsified records in underpayments scandal | Business


Employees of 7-Eleven franchises have been paid back $173m in underpaid wages, interest and superannuation, according to the fair work ombudsman.

The workplace regulator said on Friday that 7-Eleven had implemented payroll improvements after a report in 2016 found that some franchisees had “deliberately falsified records to disguise the underpayment of wages” and 7-Eleven had failed to detect or address the breaches.

In 2015, the ABC’s Four Corners revealed unlawful practices at 7-Eleven franchises, including systemic underpayment and instances of workers forced to withdraw their wages to pay back their employers to disguise underpayment.

The reports bolstered union campaigns to expose what they call “wage theft”, which persuaded the federal government to introduce higher penalties for underpayment, including potential criminal offences for the most serious cases.

In December 2016, 7-Eleven entered a “proactive compliance deed” publicly acknowledging its responsibility for addressing past non-compliance.

In an update on compliance activity, released on Friday, the fair work ombudsman (FWO) said that between September 2015 and February 2020, 7-Eleven Stores Pty Ltd paid back $144.5m in wages, $19.5m in interest and $9.6m in superannuation.

Payments compensated 4,043 current and former franchise employees with an average payout of $21,903.96. None of the money has been recovered by head office from franchisees.

The FWO has also brought 11 litigations against 7-Eleven franchisees, resulting in courts awarding more than $1.8m in penalties for operating unlawful cash-back schemes, paying unlawful flat rates to workers, and falsifying records.

7-Eleven has implemented a biometric time-recording system, called Kronos, which mandates that franchise employees clock-on using their thumbprints.

Facial recognition of employees is used to confirm shift lengths and identify payroll anomalies. In one anonymised case study provided by the FWO, this resulted in backpay for an employee who began a shift five minutes earlier and finished one hour and six minutes later than payroll systems had recorded.

7-Eleven now uses centralised payroll systems, preventing franchisees changing workers’ rates of pay. Pay slips are also generated centrally.

The FWO, Sandra Parker, said 7-Eleven “has implemented extensive high-tech systems, training and employee assistance programs across its business”.

“Through our compliance partnership, the franchisor has delivered on its commitment to address past breaches by its franchisees and lead a network that meets its lawful obligations to workers,” she said.

“We will continue to monitor compliance in 7-Eleven outlets and encourage head office to consider entering into a second compliance partnership to ensure ongoing accountability.”

The 7-Eleven chief executive, Angus McKay, welcomed the release of the FWO report.

“I said we would be accountable for our actions and take ownership of our remediation journey,” he said. “I truly believe we have done just that and will continue to do so. We remain absolutely committed to ensuring continued compliance with all workplace laws and regulations across our Australian network.”

In 2017, the Coalition introduced laws to increase the maximum civil penalties for serious contraventions of the Fair Work Act.

Franchisors and holding companies are now responsible for contraventions by their franchisees or subsidiaries where they knew or ought reasonably to have known of the contraventions and failed to take reasonable steps to prevent them.

In September 2019, the attorney general and industrial relations minister, Christian Porter, began consultation for possible new criminal penalties for deliberate and systemic underpayment.

After the outbreak of Covid-19, consultation on the issue was moved to roundtables conducted between unions and employers, from which Porter is expecting to produce an industrial relations reform bill before the end of 2020.

The Australian Council of Trade Unions secretary, Sally McManus, has said she is concerned the reforms could cut workers pay and conditions. But one area of consensus was that unions had agreed the government should subsidise small businesses’ access to payroll software to improve compliance with pay laws.

There was also “95% agreement” on a simpler and faster system to correct wage underpayments, allowing employers to agree in the Fair Work Commission to pay money back in return for protection from civil penalties in court proceedings, she told Guardian Australia earlier in October.



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Dairy farmer to face court over underpayments


The operator of a dairy farm in the Toowoomba region in Queensland is set to face court over his failure to comply with a notice to back-pay an employee.

Mark Leonard Hess, who operates a dairy farm business trading as M.L. Hess Dairy Producer at Maclagan, allegedly underpaid a working holiday visa-holder from France, who was employed on a casual basis to do general farm work, house cleaning and to milk and feed cows between August and November 2019.

The Fair Work inspector who looked into the matter believed the employee had been underpaid casual minimum rates and was not paid penalty rates for public holiday work in accordance with the Pastoral Award 2010, which formed the basis for the issuance of a Compliance Notice to Hess in February this year.

The Fair Work Ombudsman (FWO) allege that Hess failed to comply with the notice which required him to calculate and back-pay the worker’s entitlements without reasonable excuse .

The FWO also allege that Hess breached workplace laws by having failed to issue payslips to the employee and keep records of the employee’s hours of work.

In line with the FWO’s proportionate approach to regulation during the COVID-19 pandemic, the FWO made several attempts to secure voluntary compliance before commencing legal action.

The FWO is seeking a penalty against Hess and a court order to comply with the Compliance Notice, which includes rectifying any underpayments in full, plus superannuation and interest. Hess faces maximum penalties per contravention ranging of $6300 to $13,320.

A directions hearing has been listed in the Federal Circuit Court in Brisbane on 13 November 2020.





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Underpayments land electrical services business in court


A Brisbane electrical services business is set to face court for the alleged underpayment of three of its workers.

The Fair Work Ombudsman filed charges against Sphere 38 (BNE) Pty Ltd and company director Gregory Dale Johnston after an inspector found the company failed to correctly pay the three full-time electricians their untaken annual leave entitlements upon finishing their employment, a violation of the Electrical, Electronic and Communications Contracting Award 2010 and National Employment Standards.

The FWO also allege that the company, without reasonable excuse, failed to comply with the Compliance Notice that required the company to calculate and back-pay the worker’s entitlements.

In line with the FWO’s proportionate approach to regulation during the COVID-19 pandemic, the FWO made several attempts to secure voluntary compliance before commencing legal proceedings.

“Under the Fair Work Act, Compliance Notices are important tools used by inspectors if they form a belief that an employer has breached workplace laws,” Fair Work Ombudsman Sandra Parker said.

“Where employers do not comply with our requests, we will take appropriate action to protect employees. A court can order the business to pay penalties in addition to back-paying workers.”

The Fair Work Ombudsman is seeking a maximum penalty against Sphere 38 (BNE) Pty Ltd of $31,500, while Johnston is facing a maximum penalty of $6300. The regulator is also seeking court orders for the company to comply with the Compliance Notice (which includes rectifying any underpayments in full and paying superannuation) and to pay interest on the underpayments.

The hearing is scheduled in the Federal Circuit Court in Brisbane on 30 September 2020.





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‘Not good enough’: NAB investigating staff underpayments


The National Australia Bank has launched a wider independent investigation into staff payments after discovering last year that 1500 employees had been short-changed a total of $1.3 million.

NAB executive Susan Ferrier emailed staff on Thursday saying the bank had employed law firm King & Wood Mallesons and audit firm PwC to conduct a review into problems with the bank’s payroll system.

NAB executive Susan Ferrier has emailed staff to apologise for problems with its payments system. Credit:AFR

The lender identified payment problems with a small group of staff last year leading to a $1.3 million payout including extra superannuation and interest as compensation. It’s now conducting a wider review into payments of current and former Australian staff.

“We take paying our colleagues their full entitlements extremely seriously and it is unacceptable and simply not good enough that we have not always delivered on that promise. I regret these errors and apologise,” Ms Ferrier said in the email to staff.



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