George Calombaris’ restaurant empire is in the spotlight again this week after entering a Court-Enforceable Undertaking with the Fair Work Ombudsman (FWO) and backing pay workers over $7.8 million.
The FWO launched its investigation following the Company’s self-disclosure of underpayment and non-compliance with the Restaurant Industry Award. The restaurant empire, MADE Establishment, have had to backpay wages and superannuation to 515 current and former employees who were underpaid by $7,832,953 between 2011 and 2017.
The underpayments are said to be due to a failure to correctly apply annualised salary arrangements, including failing to conduct annual reconciliations to ensure that those engaged on annual salary arrangements were paid for overtime and penalty rates hours worked.
The FWO also extended the investigation to a Company who shares common shareholders and directors with the restaurant establishment. That investigation found further non-compliance and incorrect application of the Restaurant Industry Award. In particular, casual employees who were not paid at the correct classification level for their duties performed. The company had to backpay $16,371 to nine employees.
Whilst the underpayments were rectified and significant efforts were made to address non-compliance prior to the self-disclosure, MADE Establishment was still made to enter a Court-Enforceable Undertaking and must annually fund external auditors until the end of the Undertaking in 2022.
The Undertaking also requires MADE to make a contrition payment of $200,000 to the Commonwealth, and implement IR training to all human resources, recruitment, on-site management and payroll staff.
The FWO is continuing to send a strong message to employers that non-compliance will result in substantial penalties and have commented that “this 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”.
Penalties imposed for non-compliance are significant. Whether an employee’s terms and conditions are governed by a modern award, an employment agreement, or multiple instruments, it is critical that employers are fulfilling their obligations by ensuring that employees minimum entitlements are met. To get in front of your obligations and ensure compliance, contact the HR Assured team today.