Café Operator to face Court over Alleged Underpayment of Employees

Tuesday 11 July 2017 @ 9.49 a.m. | Industrial Law | Legal Research | Trade & Commerce

The operator of a 24-hour café in Melbourne’s Crown Casino precinct is facing Court for allegedly undercutting minimum wage and penalty rates despite having been put on notice, resulting in 54 employees being underpaid more than $70,000.

Background to the Action

The Fair Work Ombudsman (the Ombudsman) has commenced legal action in the Federal Circuit Court against Ital One Holdings Pty Ltd, which operates a number of cafes and restaurants in Melbourne, including Café Baci in the Crown precinct at Southbank. Also facing court is the company’s sole director, Len Di Pietro.

The Allegations

The Ombudsman alleges 54 employees at Café Baci - which operates 24 hours a day, seven days a week - were paid flat rates as low as $16 for all hours worked, leading to a total of $73,347 in underpayments.

The workers were employed in a variety of roles and 25 of the workers were visa holders with some of the workers from countries including France, Italy and India who were mainly on student and 417 working holiday visas.

It is alleged the flat hourly rates (which varied from $16 to $48) led to underpayment of various entitlements, including the minimum wage rates, overtime rates, casual loadings and penalty rates for weekend, public holiday, late night and early morning work which employees were entitled to under the Restaurant Industry Award 2010 (the Award).

It is also alleged the underpayments of all but one employee, occurred during a period of just under three months in 2015. The highest alleged individual underpayment during this period is $4,807 of a 417 visa-holder who was allegedly paid a flat rate of $17.18 but was entitled to an ordinary casual hourly rate of up to $23.09, weekend rates of up to $27.71 and public holiday rates of up to $46.18.

The other employee, a food and beverage attendant, was allegedly underpaid $5,433 between June 2016 and September 2016. The alleged underpayments of all workers have now been almost fully rectified.

Investigation by the Ombudsman

The Ombudsman discovered most of the alleged underpayments when it conducted a proactive audit of Café Baci in 2015. It is alleged the underpayments occurred despite the Ombudsman having previously put Mr Di Pietro and Ital One Holdings on notice to comply with their obligations to pay minimum wage and penalty rates a number of times in the context of investigating 12 previous underpayment allegations from workers dating back to 2007.

The Ombudsman also provided assistance in 2014 to three former Café Baci workers who took their own actions in the small claims division of the FCC, which resulted in Ital One Holdings being ordered to back-pay the three workers a total of more than $32,000.

Fair Work Ombudsman Natalie James says a key factor in the decision to commence legal action was that alleged underpayments of vulnerable workers had occurred despite the education provided to Mr Di Pietro and Ital One Holdings:

“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. 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.”

Potential Penalties

Ital One Holdings faces penalties of up to $54,000 per contravention and Mr Di Pietro faces penalties of up to $10,800 per contravention. The Ombudsman is also seeking Court orders for Ital One Holdings to commission an audit of its compliance with workplace laws and for Mr Di Pietro and other relevant managerial staff to undertake workplace relations training. An injunction restraining the company and Mr Di Pietro from contravening the Award in future is also being sought.

Reaction to the Case

Commenting on the current case, Melbourne based employment lawyer Peter Vitale said 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 … It certainly can add to the complexity, as you have the complexities of shift work rates on top of overtime and weekend penalties.”

As for paying workers flat rates, he said that 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.

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Operator of 24-hour cafe in Crown Casino precinct faces court over allegations of $73,000 underpayment –

Melbourne cafe operator back in Court after 54 employees allegedly underpaid $73,000 –FairWork Media Release

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