Coffee Club franchisee facing $15,000 underpayment scandal

By Nick Hall | 17 Sep 2019 View comments

A Victorian The Coffee Club franchisee is the latest hospitality operator to come under fire for alleged underpayment and falsified records.

The Fair Work Ombudsman (FWO) has commenced legal action against franchisee Edison Peng and his company JMSL Pty Ltd, alleging two young workers were underpaid more than $15,000. Additionally, the FWO has accused the Victorian The Coffee Club franchisee of providing false records to inspectors upon request.

According to reports, the two workers at the centre of the investigation were paid flat rates as low as $15 per hour while under employment at the Westfield Geelong location.

The flat rates resulted in underpayment of the junior hourly rates, casual loadings and penalty rates for weekend and public holiday work that they were entitled to under the Restaurant Industry Award 2010.

Underpayment in the news

While the Victorian The Coffee Club franchisee faces a potentially costly legal battle, it isn’t the only underpayment scandal to arise from the hospitality sector in recent times.

In July, celebrity chef George Calombaris forfeited a $200,000 contrition payment after it was revealed he had underpaid staff more than $7m. Similarly, wage theft has been reported with alarming regulatory at a number of food chains over the past 18 months.

In fact, this is the second time the FWO has taken legal action against a The Coffee Club franchisee.

In 2017, the FWO secured more than $180,000 in penalties against a former The Coffee Club café franchisee in Brisbane for contraventions including requiring an overseas worker to pay back $18,000 of his wages through an unlawful cash-back payment.

Sandra Parker, Fair Work Ombudsman said that underpayment of entitled Award rates would not be tolerated by the industry regulator.

“The alleged payment of low, flat rates that undercut Award entitlements is completely unacceptable conduct and we treat underpayment of young workers particularly seriously,” Parker said.

“Enforcing compliance with workplace laws in the fast food, restaurant and cafe sector continues to be a priority for the Fair Work Ombudsman. Employers in this sector are on notice that they must pay all employees according to Australia’s lawful minimum pay rates.”

Coffee Club franchisee under fire

Aside from the more than $15,000 in alleged underpayments, the Victorian The Coffee Club franchisee is also facing further charges relating to falsified documents.

According to the FWO, Pend and JMSL Pty Ltd breached the investigation by providing false or misleading records and payslips to investigators that overstated the rates the two employees were paid.

Peng faces penalties of up to $12,600 per contravention, with JMSL Pty Ltd up to $63,000 per contravention. While most of the alleged underpayment has been rectified, Parker confirmed that the FWO is seeking court orders requiring Peng and his company to repay the outstanding amount.

“Employers should be aware that the Fair Work Ombudsman takes allegations of false and misleading records extremely seriously,” Parker said.

“Any employees with concerns about false records or pay slips should contact us for assistance.”