As more and more employers find themselves in trouble for underpaying their employees (often inadvertently) it is crucial for your business to assess your employee remuneration and ensure you are paying your employees in accordance with any applicable awards or minimum wage entitlements.
National Minimum Wage In Australia
On 1 July 2023, the national minimum wage increased to $23.23 per hour (up from $21.38) or $882.80 per week (up $70 from $812.60) based on a 38-hour week for a full-time employee. Most award employees should have received a pay increase from 1 July 2023, with a national award minimum wage increase of 5.75% in 2023. This increase is applicable from an employee’s first full pay period occurring on or after 1 July 2023.
It is an important part of running a business to stay up to date with your employee’s entitlements. Not only does it play a part in developing a happy workforce, but it is also illegal for any Australian employer to pay their employees less than the minimum wage, and without compliance, you may find yourself breaching workplace laws and possible legal action.
Related: Award & Minimum Wage Increases In Australia
Bakers Delight Alleged Underpayments – Case Study
Bakers Delight Holdings Pty Ltd is an Australian-owned multinational bakery franchise chain, with franchises in Australia, New Zealand, Canada, and the United States. The Fair Work Ombudsman (FWO) commenced legal action against the Australian franchisor of the Bakers Delight chain earlier this year. It is alleged that the franchisor is liable for the extensive underpayments by three (3) Hobart Bakers Delight stores (Kingston, Lindisfarne, and Eastlands), all of which were formerly owned by one of its franchisees.
The Fair Work Ombudsman alleges the franchisor is liable for over $600,000 (being a portion of underpaid wages) because it became aware in 2019 that the stores were underpaying their employees, but failed to take preventative action, resulting in further underpayments being made. In total, it is said that the stores underpaid their employees a total of $1.25 million between July 2017 and October 2020. Many younger workers made up the majority of these underpaid employees, with many as young as 14 as well as 4 employees who were valid visa holders.
In addition to the legal action being brought by the FWO in the Federal Court against the franchisor, the FWO is also taking legal action against the couple who managed the operations of the stores involved, Mr. Puglisi and Ms. Puglisi, and the couple’s company, Make Dough Enterprises Pty Ltd.
After investigation, Fair Work Inspectors revealed all underpaid employees were also underpaid entitlements, including minimum wages, weekend and public holiday penalty rates, overtime rates, leave entitlements, and minimum shift pay, while also having money unlawfully deducted from their termination pay.
The alleged causes of the underpayments by Make Dough Enterprises and Mr and Ms Puglisi were the failure to pay overtime rates listed in an Enterprise Agreement and the failure to increase pay rates annually to ensure the minimum rates were at lease equivalent to those in the General Retail Industry Award.
In addition to being liable for making good on the underpayments to employees, Bakers Delight Holdings is also currently facing penalties of up to $66,660 per contravention, Make Dough Enterprises faces penalties of up to $66,660 per contravention or $660,000 per serious contravention; and Mr and Ms Puglisi face penalties of up to $13,320 per contravention or $133,200 per serious contravention. Serious contraventions carry a 10-fold increase in the maximum penalty.
It is an important reminder to stay up to date and carry out regular reviews of employee entitlements. It is also important to remember that even if there is an Enterprise Agreement in place, employers must be mindful of employee’s minimum entitlements. Aside from providing an environment where your employees can work happily and feel respected, regular compliance with minimum wage increases and entitlements will mitigate the risk of legal action being taken against you and your company.
If you have any questions or would like extra information regarding employment conditions, the minimum wage and award increase, or your rights as an employee or employer and your pay, you can easily access the Fair Work Ombudsman website for extra informative sources and support.
If you need legal assistance with this or any other employment-related matters, please contact our employer lawyers at TLB Law & Co.