Underpayments over four years incur penalty

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Underpayments over four years incur penalty

The operator of a Hungry Jack’s fast food outlet at Bendigo (in Victoria’s Goldfields region) has been penalised $46,200, after the Fair Work Ombudsman found it had been underpaying its 180-strong workforce for more than four years.

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The operator of a Hungry Jack’s fast food outlet at Bendigo (in Victoria’s Goldfields region) has been penalised $46,200, after the Fair Work Ombudsman found it had been underpaying its 180-strong workforce for more than four years.

The Federal Magistrates Court in Melbourne imposed the penalty against Chamdale Pty Ltd, which operates the Hungry Jack’s outlet on the corner of High and Thistle Streets in Bendigo.

Federal Magistrate Norah Hartnett found the company had underpaid 180 workers — mostly juniors, including some school-based apprentices — a total of $104,946 between July 2005 and December 2009.

The largest individual underpayment was $8218. Twenty-nine employees were underpaid more than $1000.

Failure to upgrade classifications
 
The retail employees generally worked in customer service and food preparation roles, and were variously employed on a full-time, part-time and casual basis.

Most of the underpayments were the result of Chamdale failing to provide the classification and pay-rate upgrades that the employees were entitled to based on length of service.

This resulted in underpayment of the minimum hourly rate, overtime and public holiday penalty rates. The company also underpaid or failed to pay annual leave entitlements and a laundry allowance.

The Court noted that while Chamdale had relied on information provided by Hungry Jacks Pty Ltd head office for its employee rates of pay, ‘some of those wage updates did not inform accurately or sufficiently and led to error’.

Message

Federal Magistrate Hartnett said there was a need to ‘send a message to the community at large, and employers particularly, that the correct entitlements for employees must be paid and that steps must be taken by employers (of all sizes) to ascertain and comply with minimum entitlements’.

Taking into account the fact that Chamdale had no ‘priors’ recorded against it for previous similar conduct, had undertaken to voluntarily rectify all underpayments, had engaged a specialist industrial relations lawyer and appointed a new payroll adviser, Federal Magistrate Hartnett imposed a penalty of 20% of the applicable maximum of $231,000.

Fair Work Ombudsman Nicholas Wilson says the penalty delivered by the Court is a reminder to employers, no matter how big or small, that underpayment of employees is a serious matter and it is important to check they are meeting their lawful obligations to staff.

‘We expect those companies which employ significant numbers of young people to diligently exercise their workplace obligations and ensure staff receive their full and proper entitlements,’ he said.

Mr Wilson said the Fair Work Ombudsman would shortly launch a dedicated webpage to assist the franchise sector, with useful information and resources aimed at franchisors and franchisees.
 
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