Degani Café Underpays Young Workers


A Degani Bakery Café south of Melbourne has agreed to back-pay staff almost $10,000 after a Fair Work Ombudsman audit found employees as young as 18 were being underpaid.

The underpayments occurred at the Degani outlet located at the Bentons Square shopping centre in Mornington.

The Fair Work Ombudsman discovered the underpayments during a self-initiated compliance activity commenced in 2016 that involved audits of 14 Degani branded cafes in and around Melbourne and two at Rockhampton, in Queensland.

The audits checked whether workers were being paid their lawful minimum entitlements after employee enquiries and intelligence received by the Fair Work Ombudsman raised concerns some Degani Bakery Cafes were not meeting their obligations.

Each of the audited cafes was in franchisee or licensee arrangements with Degani Australia Pty Ltd.

The Fair Work Ombudsman found that 15 workers at the Degani Bakery Cafe in Mornington were underpaid a total of $9375 between September and November, 2016.

The workers were engaged as waiters or cooks and included four juniors aged under 21 and five others aged 25 or younger.

The company paid flat hourly rates of between $18 and $21 to its casual employees, which was not sufficient to meet the casual loadings and various penalty rates the workers were entitled to under the Restaurant Industry Award 2010.

For example, the worker with the largest underpayment of $1318 was paid a flat hourly rate of $20, despite being entitled to base rates including casual loading of $23.64, weekend rates of up to $28.37 and $47.28 on public holidays, at the time.

The company also breached the Award by failing to provide unpaid meal breaks for employees who worked more than five hours, roster part-time employees for at least three consecutive hours and pay annual leave loading.

A contributing factor in the underpayments was the failure of the Mornington outlet’s operators – Kerry Marie Rowson and her company Degani@Bentons Pty Ltd – to correctly apply advice they received about annualised rates from a workplace relations advisory firm.

Ms Rowson and her company fully co-operated with Fair Work inspectors, agreeing to back-pay workers in full and overhaul their business practices under the terms of an Enforceable Undertaking (EU) entered into with the Fair Work Ombudsman.

The company must also apologise to workers and display notices detailing its breaches in the workplace and on the company’s website.

The company must also commission professional audits of its compliance with workplace laws across the next two years and rectify any breaches; provide training on workplace laws to all managerial staff and information to all employees; register with the Fair Work Ombudsman’s online My Account portal and develop processes for future compliance.

Fair Work Ombudsman Natalie James said the EU was an appropriate outcome given the circumstances of the underpayments and the company’s cooperation.

Ms James says the EU will ensure the company is closely watched.

“EUs have allowed us to achieve strong outcomes against companies that breach workplace laws without the need for civil court proceedings, which require a greater investment of taxpayer resources and can significantly extend the time it takes for workers to receive their entitlements,” Ms James said.

“Breaching the terms of an EU is grounds for litigation and the community can be assured that we will be monitoring Degani@Bentons Pty Ltd to ensure it complies with the terms of this undertaking and pays workers correctly in future.”

In 2016-17, more than $5.2 million in underpaid wages and entitlements was returned to employees as a result of their employers entering into EUs with the Fair Work Ombudsman, an increase of more than one-third from the year before.

Ms James says employers should be aware that the Fair Work Ombudsman places a high priority on ensuring young workers receive their full entitlements because they can be vulnerable if they are not fully aware of their workplace rights or reluctant to complain.

“With so much information and support available at there is no excuse for employers to fail to meet their obligations,” she said.

The Fair Work Ombudsman’s online tools and resources can assist employers to determine their applicable Award, as well as classification and pay rates, allowances, overtime and penalty rates.

The Pay and Conditions Tool (PACT) provides advice about pay, shift, leave and redundancy entitlements and there are templates for pay slips and time-and-wages records.

Employers and employees seeking assistance can also contact the Fair Work Infoline on 13 13 94, with priority assistance available for small businesses. A free interpreter service is available on 13 14 50.

The Fair Work Ombudsman will publish a public report on the Degani self-initiated compliance activity after its completion.

Follow Fair Work Ombudsman Natalie James on Twitter @NatJamesFWO, the Fair Work Ombudsman @fairwork_gov_au or find us on Facebook