A 24-hour Melbourne cafe and its director will face court with the Fair Work Ombudsman claiming it had failed to pay 54 workers their minimum wage and penalty rates, resulting in alleged underpayments totalling $73,000.
Ital One Holdings Pty Ltd, which operates Cafe Baci, located in Melbourne’s Crown Casino precinct, will face the Federal Circuit Court over allegations of underpayments. The company’s sole director Len Di Pietro will also face court, with the ombudsman highlighting the company and the director have previously been put on notice about meeting minimum obligations.
The ombudsman is alleging the underpayment of 54 workers at Cafe Baci, most of whom were on student or 417 visas. The allegations include that the workers were paid rates regardless of the time of day they worked, varying from $16 to $48. In doing so, the cafe allegedly failed to pay the workers correct minimum wage rates, overtime rates, casual loadings and penalty rates.
The underpayments allegedly occurred in just three months in 2015, and the ombudsman advised in a statement on Monday “alleged underpayments of all workers have now been almost fully rectified”.
Get business news first
Sign up to SmartCompany’s daily newsletter
The Fair Work Ombudsman says it had notified Ital One and its director a number of times concerns workers were not being paid correctly, including investigating 12 previous underpayment claims. Fair Work Ombudsman Natalie James said in a statement the decision to pursue legal action was taken because of the alleged underpayments occuring despite the previous “education” of the business and its director.
The first time the company was put on notice was in 2007 in relation to 12 different underpayment allegations. Additionally, the ombudsman says it provided assistance in 2014 to three Cafe Baci employees who took the business to the small claims court, resulting in Ital One having to backpay them $32,000.
“It is simply unacceptable for an employer to continue to underpay workers after being directly educated on their obligations to meet minimum employee pay rates and having been ordered by a Court to back-pay workers,” Fair Work Ombudsman Natalie James said in a statement.
“We also treat cases involving underpayment of overseas workers particularly seriously because we are conscious that they can be vulnerable due to a lack of awareness of their entitlements, language barriers and a reluctance to complain.”
Flat rates won’t fly in 24-hour businesses
Melbourne based employment lawyer Peter Vitale told SmartCompany if the 2007 allegations of underpayment against the director and Ital One “weren’t enough motivation to get your house in order, I’m not really sure what is”.
“Generally, if you’re going to start employing people the first thing to do is to understand what your legal obligations are no matter what. If you’re then approached by the ombudsman about issues with underpayment, it might be something to be more vigilant about,” Vitale told SmartCompany.
For business owners running 24-hour hospitality businesses, Vitale advises there’s more flexibility in the Restaurant and Catering Award around rates payable at different hours, compared to something like the manufacturing award.
“It certainly can add to the complexity, as you have the complexities of shift work rates on top of overtime and weekend penalties,” he says.
As for paying workers flat rates, Vitale says while there are “legitimate means” in which businesses can pay an employee a flat hourly rate, a “critical thing” to keep in mind is that the flat rate overall can never be less than an employee’s’ overall entitlement under their award.
“The idea you can save money by paying a worker a flat rate is a fallacy,” he says.
Finally, 24-hour businesses should also keep other provisions in mind, such as meal and travel allowances if employees are working odd hours.
“There are a range of other issues which can arise under awards such as meal allowances, potentially shift allowances, and potentially travel allowance provisions,” he says.
“Employees must also have a minimum break between shifts, and there are operational health and safety issues to keep in mind too, such as ensuring employees are not adversely affected by fatigue.”
Cafe Baci did not provide comment on the court action when contacted by SmartCompany this morning. SmartCompany contacted Crown Casino but did not receive a response prior to publication, and was unable to contact Ital One Holdings Pty Ltd.