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The Fair Work Ombudsman has prosecuted a former Chatime bubble tea franchisee after finding it underpaid workers more than $46,000 and failed to keep adequate records.
Fair Work Ombudsman v Panol DC Pty Ltd & Ors [2021] FCCA 373
The FWO commenced proceedings against Panol DC Pty Ltd, which operated a Chatime franchise, and its two directors, in relation to underpayment and record-keeping breaches of the Fast Food Industry Award 2010 (Award).
The breaches occurred over approximately eleven months and affected seventeen casual employees. The employees were each paid a flat rate that did not meet their entitlements to minimum weekly wages, casual loading, public holiday pay and special clothing allowances.
The directors admitted to the underpayment allegations against them but gave evidence they had sought advice from Chatime, the franchisor, in relation to the payment of wages and allowances. The directors acknowledged their reliance did not absolve them from legal liability, but submitted their reliance was reasonable, given their lack of business experience.
The directors’ reliance on Chatime formed an important part of the case. The Federal Circuit Court imposed penalties of $41,600, $9,600 and $6,600 respectively against Panol and each of the two directors.
However, it suspended payment of the penalties against the two directors on the basis of their uninformed reliance, and indicated the penalties may be wholly set aside after three years, if the directors do not engage in any further breaches of the Fair Work Act 2009 (Cth) or an industrial instrument in that time.
The case reveals the significant risks faced by employers who get the payment of wages wrong. The case also highlights the risk that franchisors may face when advising their franchisees in relation to their employment obligations, especially when the franchisee relied on this advice and or did not seek independent advice in relation to their obligations.
Please contact our Employment, Safety and Migration and Franchising Teams should you require assistance ensuring your business’s compliance with employee’s wages entitlements and franchising obligations.
The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.
The Fair Work Ombudsman has prosecuted a former Chatime bubble tea franchisee after finding it underpaid workers more than $46,000 and failed to keep adequate records.
Fair Work Ombudsman v Panol DC Pty Ltd & Ors [2021] FCCA 373
The FWO commenced proceedings against Panol DC Pty Ltd, which operated a Chatime franchise, and its two directors, in relation to underpayment and record-keeping breaches of the Fast Food Industry Award 2010 (Award).
The breaches occurred over approximately eleven months and affected seventeen casual employees. The employees were each paid a flat rate that did not meet their entitlements to minimum weekly wages, casual loading, public holiday pay and special clothing allowances.
The directors admitted to the underpayment allegations against them but gave evidence they had sought advice from Chatime, the franchisor, in relation to the payment of wages and allowances. The directors acknowledged their reliance did not absolve them from legal liability, but submitted their reliance was reasonable, given their lack of business experience.
The directors’ reliance on Chatime formed an important part of the case. The Federal Circuit Court imposed penalties of $41,600, $9,600 and $6,600 respectively against Panol and each of the two directors.
However, it suspended payment of the penalties against the two directors on the basis of their uninformed reliance, and indicated the penalties may be wholly set aside after three years, if the directors do not engage in any further breaches of the Fair Work Act 2009 (Cth) or an industrial instrument in that time.
The case reveals the significant risks faced by employers who get the payment of wages wrong. The case also highlights the risk that franchisors may face when advising their franchisees in relation to their employment obligations, especially when the franchisee relied on this advice and or did not seek independent advice in relation to their obligations.
Please contact our Employment, Safety and Migration and Franchising Teams should you require assistance ensuring your business’s compliance with employee’s wages entitlements and franchising obligations.