Degani franchisee fined $140,000 for workplace breaches

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Inside Franchise Business: Degani franchisee fined $140,000 for underpaymentDegani Bakery Café has once again been rocked by underpayment issues following an investigation by the Fair Work Ombudsman.

The operators of the Greensborough Degani outlet in Melbourne were penalised over $140,000 for underpaying staff and providing inspectors with false records.

Operator and part-owner, Sajid Amin was penalised $23,562 in the Federal Circuit Court, with the company that Amin is director of, SHMAP Group Pty Ltd penalised a further $117,810.

The Greensborough outlet operates through a franchise agreement with Degani Bakery Café Pty Ltd, a subsidiary of Degani Australia Pty Ltd, with the latest concerns identified after the FWO launched a proactive audit of Degani outlets.

The audits followed a high number of requests for assistance from workers alleging underpayment by the Degani network were received, with Inside Franchise Business reporting in August that 14 of the 15 audited stores failed to meet compliance regulations.

Amin and SHMAP Group admitted in court that they underpaid 15 employees, including four teenagers and four adult migrant workers from China and Malaysia a total of $12,506.

The underpayment occurred in relation to minimum hourly rates, penalty rates and entitlements over a nine week period in 2016, with some paid as little as $12 an hour.

Sandra Parker, Fair Work Ombudsman said the hefty penalty indicated the body's zero tolerance stance on non-compliance and vulnerable worker exploitation.

“We took this company to court because the conduct involved two of the most vulnerable groups in our workforce - young workers and workers from non-English speaking backgrounds. These groups are at risk as they may not seek help because of language and cultural barriers, concerns about visa status, or they may be unaware of their workplace rights,” Parker said.

The court also heard that Amin and SHMAP Group had failed to provide pay slips and provided Fair Work inspectors with false records throughout the investigations.

“The conduct in this case was further aggravated with the employer hampering our investigation by providing inspectors with falsified records. We will take enforcement action against any business that deliberately contravenes Australia’s workplace laws,” Parker said.

Judge Phillip Burchardt found that the underpayments had occurred despite the operators being aware of their lawful obligations, acknowledging they had not only completed a Fair Work Ombudsman online training course, but also received advice from Degani.

Not only does the evidence suggest that some endeavours were made to educate him, it is for him as the employer, and for the employer itself through him, properly to inform themselves, particularly when they were on clear notice that obligations were extant,” Judge Burchardt said.

Nick Hall

Nick is business journalist at Octomedia, working on View More...
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