Former Crust franchisee slammed with $75,000 penalty

By Nick Hall | 19 Nov 2019 View comments

Just weeks after a Crust franchisee in Hobart copped a $100,000 penalty, the pizza chain is under fire again for underpayment, this time involving a former Crust franchisee in Melbourne.

Desire Food Pty Ltd, which formerly operated the Cheltenham Crust outlet faced an investigation earlier this year, accused of underpaying employees and providing false records to the Fair Work Ombudsman (FWO).

However, in a dramatic turn of events, company director and part-owner Chern Ming Lee, who managed the outlet admitted to the breaching workplace laws. According to the FWO, the former Crust franchisee underpaid seven employees, six of which were visa holders from non-English speaking backgrounds a total of $35,725

Facing hefty penalties, the Federal Circuit Court showed little leniency. Desire Food was penalised $63.500, with Lee copping a further $11,900 penalty for the breaches.

Former Crust franchisee underpayment concerns

While the $35,000 underpayment figure concerned all seven employees, more than 85 per cent of that sum related to just one worker. After receiving requests for assistance, FWO investigators found that one employee had been undercut $30,416 between 2013 and 2016.

The former Crust franchisee underpayments were the result of a failure to comply with the minimum entitlements under the Fast Food Industry Award 2010, including minimum ordinary hourly rates, casual loadings and penalty rates for night-time, weekend and public holiday work.

The following investigation found similar breaches for the six other employees with underpayments ranging from $77 and $2481 during a sample period between May and July 2017. All underpayments have now been rectified.

Judge Alister McNab found that the matter involved vulnerable employees and there was a need to impose penalties to deter other employers from similar conduct.

“General deterrence is important as a means of communicating the need for all employers to comply with workplace laws,” Judge McNab said.

Migrant worker underpayment

Similar to previous reports, the latest underpayment scandal weighs into the emerging issue of migrant worker underpayment.

The majority of the underpaid workers were employed as delivery drivers and pizza makers, with one victim just 17 at the time.

Sandra Parker, Fair Work Ombudsman said the watchdog was eager to crack down on the disturbing trend.

“All employees have the right to be paid the lawful minimum pay rates that apply in Australia, regardless of their visa status,” Parker said.

“Taking enforcement action to protect vulnerable workers and improve compliance in the fast food industry are priorities for the Fair Work Ombudsman.”

“Any workers with concerns about their pay or entitlements should contact the Fair Work Ombudsman. We have an agreement with the Department of Home Affairs where workers can contact us for assistance without fear of their visa being cancelled,” Parker said.

Desire Food and Lee are no longer the operators of the Cheltenham Crust outlet, with the FWO indicating that no concerns had been raised about the current operators.