Investigation by FWO Reveals Underpayment of Café Employees
Friday 21 June 2019 @ 1.04 p.m. | Industrial Law | Legal Research
In a statement released by the Fair Work Ombudsman (“the FWO”), the employment watchdog has announced that following an investigation, the operator of two Melbourne cafes has back-paid 26 employees a total of $24,947 and will be under close scrutiny for three years.
Café Touchwood Pty Ltd (t/a Café Touchwood) admitted to underpaying a total of $22,313 which was owed to 17 employees, with the largest individual underpayment being $3,852. The affected worker, who was a full-time chef who turned 21 during the audit period, was paid a flat rate of $18.50, despite being entitled to a $21.29 base rate and up to $42.58 for overtime hours.
Cafecino Enterprise Pty Ltd (t/a A Minor Place café) also admitted that nine employees were underpaid a total of $2,633, with the largest individual underpayment being $598. The director of Café Touchwood Pty Ltd, Cindy Huynh, has committed to improve their compliance with workplace laws by signing up to a court-Enforceable Undertaking ("EU").
Ms Huynh (who is also a director of Cafecino Enterprise Pty Ltd) and her husband, Duy Phuong Dang, a shareholder and the business’s manager for Cafecino Enterprise Pty Ltd, have also entered into an EU.
Background
Fair Work Inspectors found that between January 2018 and April 2018, the companies each paid unlawfully low flat rates of pay, with part-time employees at each café receiving about $20 per hour, while casual employees at the other café were receiving between $17 and $22 per hour.
The investigation revealed that across the cafes, 23 of the 26 underpaid employees were workers aged 25 or younger, including a 17-year-old at Café Touchwood. Some of the underpaid workers were visa holders, including from South Korea, Germany, Japan, the UK and India, with some on student visas.
ABC News reported on the allegations of underpayment in a May 2018 article, where it was revealed an employee at one of the cafes was not being paid the award rate. Speaking to ABC News, the employee said:
As a casual, the employee believed she should be getting $23.50 an hour for ordinary days.
Comment from the FWO
FWO Sandra Parker said in a Media Release:
Ms Parker also said “improving compliance in the fast food, restaurant and café sector is a priority for the agency and we encourage any workers with concerns about their pay to contact us”.
Remedial Action Undertaken
The FWO reports all underpayments have been rectified, and the two cafes have entered into a three-year EU with the regulator. Under the EU, the companies must agree to have an external professional conduct three audits of pay and conditions of all employees in 2019 and 2020, fix any underpayments uncovered, and commission workplace relations training for managers.
The cafes must also make a contrition payment of $8,000 to the Commonwealth Government’s Consolidated Revenue Fund.
Previous Investigations by the FWO
In May 2019, the FWO took action against a café in Fitzroy North (Victoria) for underpayment of entitlements.
Fair Work inspectors found that Super Max Coffee Pty Ltd (t/a Mitte), failed to pay employees minimum casual loadings, overtime rates and penalty rates as per the Restaurant Industry Award.
In this instance, the underpayment occurred between July 2017 and June 2018, during which time one worker was paid an hourly weekend rate of $23 instead of the $28.22 they were entitled to. For working public holidays, the worker was paid $31.50 instead of $47.03.
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