A fast food restaurant in the Melbourne suburb of Box Hill that was found to have underpaid about eight workers $46,000 over the course of a little more than a year claims it had no idea about minimum wage rates, according to the Fair Work Ombudsman.
The operator of Mr Kitchen Box Hill, a company called DM&G, was found to have paid eight current and former workers, which included international students from China and Taiwan, a flat rate of around $1.50 an hour under the minimum wage rate.
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A former employee tipped off the Ombudsman to the underpayments, which occurred between December 2013 and January 2015.
The restaurant has entered into an enforceable undertaking at the Ombudsman’s request and will have to pay the underpaid amounts to the workers.
A second associated outlet in Doncaster, called Mr Kitchen The Pines, will also enter into an agreement with the Ombudsman after it admitted paying flat rates to its workers and not paying proper entitlements.
Fair Work Ombudsman Natalie James said while she did not believe the underpayments were deliberate, the company’s conduct demonstrated an ignorance of workplace law.
Rachel Drew, partner at TressCox Lawyers, told SmartCompany this morning the underpayments can be considered “a very expensive exercise” for the small business.
“The Fair Work Ombudsman has identified a very large unpaid wages bill, particularly for a fast food business in a food court,” she says.
“They will have to figure out how to pay that.”
Drew says the business has also had to agree to range of other arrangements, which would see them paying some additional costs.
“They’ve agreed to undertake external workplace relations training, they also have to undertake some self-auditing and reporting… they will have to meet those costs,” she says.
Drew says while it is not clear if the relationship between Mr Kitchen Box Hill and Mr Kitchen The Pines is one of a formal franchise or a “loose arrangement”, it should act as a warning for others.
“It’s important for business owners to understand it is their responsibility to find out about wages, entitlements and obligations,” she says.
“There is a lot of information readily available to assist small business, but ultimately it is the responsibility of individual business owner to apply it correctly.”
Drew says there are also opportunities for franchisors to give franchisees a “big picture” overview of workplace obligations.
“It appears to be sadly lacking in this case,” she says.
“They didn’t even know about simple minimum wage rates.”
SmartCompany contacted DM&G but a spokesperson for the company declined to comment.