Legal

Popular Melbourne cafes under “close scrutiny” after underpaying workers $25,000

Dominic Powell /

Two cafes in Melbourne’s biggest brunch hotspots have admitted to underpaying workers nearly $25,000 and will find themselves under “close scrutiny” from Australia’s workplace watchdog after entering a three-year-long enforceable undertaking with the regulator.

In a statement, the Fair Work Ombudsman (FWO) revealed Touchwood Cafe in Richmond and A Minor Place cafe in Brunswick were found to be underpaying 26 workers, with a total of $24,947 in underpayments being clocked up over the first four months of 2018. Both cafes are owned by the same director.

The FWO found the cafes were paying employees “unlawfully low” flat hourly rates, which were significantly lower than the rates stipulated in the relevant award. Casual employees at the cafes were receiving between $17 and $22 per hour, where part-time employees were receiving around $20 per hour.

The investigation follows a report by the ABC in May 2018, where a former employee at Cafe Touchwood said she wasn’t being paid appropriate public holiday and weekend rates, at times being paid over $20 less per hour than she should.

The employee estimated she was losing around $150 a week due to the underpayment.

The FWO found part-time employees were also not receiving appropriate entitlements for annual leave, and employees were not recieving overtime and penalty rates.

“Improving compliance in the fast food, restaurant and café sector is a priority for the agency and we encourage any workers with concerns about their pay to contact us,” Fair Work ombudsman Sandra Parker said in a statement.

All underpayment has since been rectified, and the two cafes have entered a three-year enforceable undertaking with the regulator.

The undertaking requires the businesses to make a declaration every six months that employees are being paid correctly, and must also commission an independent auditor to verify all correct entitlements are being paid.

The cafes must also make a contrition payment of $8,000 to the Commonwealth Government’s Consolidated Revenue Fund.

“We have no tolerance for employers who think they can pay unlawfully low flat rates of pay to young or migrant workers, who can often be vulnerable,” Parker said.

“These court-enforceable undertakings mean the companies have not only had to pay back the money owed to their employees, but will also face ongoing close attention by the FWO.”

The FWO has been on the warpath in 2019, cracking down on numerous regional and inner-city businesses for flouting workplace law. Earlier this month, a raid of businesses in Albury-Wodonga, Ballarat and Wollongong found a whopping 47% were in breach of the law.

Courts have also been increasingly willing to hand down massive penalties for exceptionally egregious cases of underpayment. A sushi outlet paying workers just $9 per hour was fined over $380,000 at the start of the month in a case the judge highlighted as “objectively serious”.

SmartCompany contacted A Minor Place and Cafe Touchwood but did not recieve a response prior to publication.

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Dominic Powell

Dominic is the former features and profiles editor at SmartCompany.

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