Workplace Relations: Fair Work Ombudsman v Zillion Zenith International Pty Ltd & Anor  FCCA 433
The Federal Circuit Court of Australia has ordered two franchisees of La Porchetta restaurant to pay fines of $167,409 each after failing to pay young employees their correct pay and entitlements and instead supplementing staff pay with free or discounted pizza and soft drinks.
La Porchetta is a pizza and pasta restaurant chain with over 70 stores throughout Australia and New Zealand. Ruby Chand (‘Mr Chand’) and his two companies, Zillion Zenith International Pty Ltd (‘Zillion Zenith’) and Bound For Glory Enterprises Pty Ltd (‘Bound For Glory’) run the Pakenham and Berwick restaurants of La Porchetta, both located in Melbourne.
Between 2009 and 2012 111 employees of Zillion Zenith and Bound For Glory were underpaid a total of $258,000. These employees were mostly teenagers working in their first job and included apprentice cooks, full and part time trainees and other junior staff.
Following an investigation by the Fair Work Ombudsman, Mr Chand, Zillion Zenith and Bound For Glory accepted that they had not paid the correct minimum rates of pay, had not paid casual loadings to casual employees, annual and personal leave was not accrued for full and part time employees or paid on termination, superannuation was not paid and accurate employment records were not kept.
Instead, Mr Chand, as director of Zillion Zenith and Bound For Glory, supplemented employee’s pays with “free food and drink that cost… more than the underpaid wages” in an effort to overcome financial difficulties that the restaurants were facing.
Judge O’Sullivan said that the behaviour displayed by Mr Chand and his companies “belongs in the dark ages rather than twenty first century Australia.”
Mr Chand was fined $55,803 in his personal capacity, with Zillion Zenith and Bound For Glory both receiving fines of $139,507.50 for its actions. The companies were also ordered to repay more than $79,000 in outstanding entitlements to employees who had not yet been reimbursed.
The judge highlighted the vulnerability that workers in the hospitality industry face:
“It has been repeatedly identified that there is a significant risk of underpayments and breaches of workplace legislation in the restaurant and hospitality industry where vulnerable employees ... are employed. This case is yet another example that the risk continues to exist.”
Following the decision, The Fair Work Ombudsman announced that employees at La Porchetta restaurants across Australia would have their pay packets reviewed to ensure they were receiving their full entitlements. Additionally, La Porchetta Franchising entered into a Proactive Compliance Deed with the Fair Work Ombudsman and agreed to provide new franchisees with employee induction training and information covering key aspects of workplace laws.
This case demonstrates to employers that underpaying staff will not be tolerated by the Fair Work Ombudsman. Small to medium size businesses must have a developed understanding of their obligations to pay minimum employee entitlements and comply with workplace laws otherwise they could face severe financial consequences.
* PCC Lawyers are a team of employment practitioners based in Sydney, with many years of combined knowledge and experience in workplace law, industrial relations, workplace investigations and training. They provide a high standard of excellence and an exceptional level of personal service to a variety of clients in the Sydney metropolitan area, Central Coast, regional NSW and interstate.