Two Melbourne La Porchetta franchises have come under fire from the Fair Work Ombudsman for allegedly underpaying more than 100 staff, as the owner-operator and the ombudsman prepare to do battle in court.
Ruby Chand, the owner-operator of the Berwick and Pakenham La Porchetta restaurants, and his two companies Zillion Zenith International and Bound for Glory Enterprises, will face court in September for allegedly underpaying 111 staff members who were mostly teenagers.
The FWO claims Chand, through his companies, underpaid the staff members a total of $258,019 between July 2009 and February 2012.
The majority of the workers were employed on a part-time or casual basis as cooks, kitchen attendants and food and beverage service employees, with the youngest worker being 14 years old.
The alleged underpayments ranged from $3 to $25,358 and were discovered by Fair Work inspectors after a complaint was made by a parent of one of the young employees.
The FWO also claims breaches of laws relating to leave entitlements and record keeping.
SmartCompany contacted Chand, but received no response prior to publication.
Chand told Fairfax he was under the impression he could top up payments to staff by providing them with pizza and soft drink.
"We thought that we could give them free food and drink to compensate everything. Instead of someone getting paid $10.80, we were paying $10.50."
"It was a simple error," he says.
Chand said the value of the meals he'd provided the employees was more than he would have paid in wages and by giving them food he'd "lost more money".
He also said the FWO had vehemently pursued him.
Since these comments were made, Chand says he has been advised by his lawyer not to comment further.
M+K Lawyers partner Andrew Douglas told SmartCompany this case exemplifies how young vulnerable workers are willing to "get any work they can".
"If we are to accept what has been said by the owner, this just shows the level of misunderstanding that's out there. He clearly does not understand his obligations under the award rates."
"People in small business often think they're doing the right thing, but the level of ignorance is incredibly high. I suspect this reflects a broader malaise in small business," he says.
Douglas says underpayments of this size (more than 100 workers) have occurred in the past, but there hasn't been a case like it in the hospitality industry in "recent memory".
He says if Chand immediately rectifies the underpayments the likelihood of penalties is "relatively low", but if there is resistance to back-pay then "penalties will be inevitable".
The FWO announced yesterday it was also commencing audits of up to 1000 cleaning contractors through Australia and Douglas says the ombudsman will likely find "an extensive mix" of breaches in this industry.
"There will be another dose of terrible underpayments, very large recoveries and penalties as the ombudsman shifts his attention to the cleaning industry."
"We see this happen in any environment where there is a high level of casualised labour and vulnerable workers," he says.
Underpayment in the hospitality industry has been a recent focus of the Fair Work Ombudsman. Earlier this week the ombudsman announced it is pursuing a Perth restaurant for allegedly underpaying an Indian chef and then terminating him when he texted in sick.