Little Cupcakes fined $49,896 for underpaying staff after surprise audit

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The popular dining precinct on Degraves Street in Melbourne. Source: Unsplash/Steven Groeneveld.

The Federal Circuit Court has fined the operators of a cupcake business in Melbourne $49,896 for underpaying their employees following a surprise audit by Fair Work inspectors. 

The court found Shri Krishna Guru Pty Ltd, which operates Little Cupcakes retail stores and a baking store in Melbourne, incorrectly applied casual loading rates under the Fast Food Industry Award 2010. The company inconsistently paid leave loadings, minimum hourly rates and loadings for weekends, public holidays and overtime work.

A total of 35 workers were underpaid $57,179.69 between January 2018 and February 2019, with underpayments ranging from $20.08 to $10,960.77 for each worker.

The employees worked across three Little Cupcakes stores in the CBD and a baking facility located in Armadale.

About one third of the workers were under 21 years of age, and the majority were visa holders, from countries including South Korea, India and Indonesia.

In response, the Federal Circuit Court imposed a $41,580 penalty against Shri Krishna Guru Pty Ltd and an $8,316 penalty against the company director.

A spokesperson for Little Cupcakes told SmartCompany that the operators became aware they had incorrectly classified some workers as part time rather than casual following the Fair Work Ombudsman’s investigation. 

“As soon as we were made aware of these by Fair Work Ombudsman, we rectified our hiring system and settled the differences of underpayments immediately,” the spokesperson said. 

Fair Work Ombudsman Sandra Parker said improving compliance in the hospitality sector remains one of the ombudsman’s top priorities even during the COVID-19 pandemic.

“We will continue to enforce workplace laws in a proportionate manner during the COVID-19 pandemic and hold employers to account in order to protect employees,” Parker said in a statement.

Fair Work inspectors audited Shri Krishna Guru during an unannounced workplace visit as part of a wider compliance blitz that targeted businesses in Degraves Street and Hardware Lane. 

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