Over $730,000 in Unpaid Wages Recovered from Franchises

Over $730,000 in Unpaid Wages Recovered from Franchises

$731,648 in unpaid wages has been recovered after a national investigation into emerging fast food, restaurant and café franchises. Almost 80% of stores were found to be breaching the law. More than 50% had underpaid staff.

Fair Work Inspectors audited franchises that have recently commenced operations in Australia – Chatime, GongCha, Hot Star Chicken, PappaRich, Sushi Izu, Nene Chicken and The Sushi 79.

Franchises were selected based on intelligence data that raised concerns about compliance with workplace laws, including anonymous tip offs, requests for assistance and stakeholder referrals.

Six of the seven emerging franchises were founded overseas – five in Asia and one in the USA.

During the audits, Inspectors questioned employers and employees in 76 stores and assessed time and wages records. Inspectors found that almost 80 per cent of the stores they visited breached at least one workplace law.

More than 50 per cent of all businesses audited had underpaid staff.

The most common workplace law breaches related to pay slip obligations, penalty rates and other minimum hourly rates of pay, and record-keeping.

The Fair Work Ombudsman said the audits confirmed concerns about new franchise brands, often from overseas, starting operations without due diligence on workplace law compliance.

In response to the breaches, Inspectors issued 38 contravention letters, 13 infringement notices (totalling $8780 in penalties for pay slip and record-keeping breaches), eight compliance notices (requiring back-payment of $61,745 for 68 employees) and 26 formal cautions.

Recoveries of underpayments have occurred from 40 businesses, with more recoveries possible in relation to matters still before the court.

The Fair Work Ombudsman also commenced court action against six companies allegedly involved in the most serious breaches, including the operator of three PappaRich outlets in Sydney, a former Chatime franchisee in Sydney, a company and two of its directors operating two The Sushi 79 stores in Brisbane, and the Chatime Australia franchisor Infinite Plus.

In August, the Federal Circuit Court ordered total penalties of $125,700 in the The Sushi 79 action. In November 2019, the FWO also secured $307,802 in penalties in the Papparich action.

Every week, we are helping many small businesses around Australia move away from manual payroll systems and with their payroll wage calculations. If you need some help, or are not sure whether you are compliant, reach out for a confidential chat.

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