Key ‘take-out’ of the Calombaris scandal: action required to end wage theft now
23rd July, 2019
An edited version of this post was published in The Sydney Morning Herald on 2 August 2019: Stronger stick needed to enforce workplace laws
The Enforceable Undertaking entered into between MasterChef star George Calombaris’s MADE Establishment Pty Ltd and the Fair Work Ombudsman makes for interesting reading. (see: https://www.fairwork.gov.au/about-us/news-and-media-releases/2019-media-releases/july-2019/20190718-made-establishment-eu-media-release)
The celebrity chef has rightly copped a pounding in the media and on social media since details of the undertaking were made public late last week. That’s because the extent of the MADE corporate group’s underpayments has ballooned out from an earlier estimate of $2.6 million to around $7.8 million (the amount that has now been back-paid to more than 500 current and former employees).
The outrage has been fuelled by:
- Calombaris’s past complaints about having to pay award penalty rates;
- the seemingly low ‘contrition payment’ of $200,000 that forms part of the undertaking, an inadequate penalty given the scale of the breaches; and
- the federal Government’s apparent unwillingness to act on wage theft despite a litany of examples in recent years. Its own Migrant Workers Taskforce final report in March described a ‘culture of underpayment’ in many sectors. Instead of addressing this, the Government has prioritised its obsession with further reducing union power through the Ensuring Integrity Bill and appeasing conservative culture warriors by shoring up ‘religious freedom’ (largely in response to the Israel Folau/Rugby Australia fracas).
In dealing with the MADE group’s numerous infringements of civil penalty breaches of the Fair Work Act, the FWO has a suite of enforcement options open to it. At the hardest end, it can bring court proceedings that would result in the imposition of orders for rectification of the breaches and the imposition of significant monetary penalties.
Instead of this, the FWO has chosen the softer-edged option of an enforceable undertaking under section 715 of the Fair Work Act. This requires MADE Establishment to implement a range of actions including the following:
- register an account with the FWO and subscribe to its updates on pay rates and entitlements etc (surely any sensible business operator would already be using this free service);
- implement systems and processes to monitor compliance with all relevant legislation and awards (again, a minimum expectation of any small-medium business let alone one the size of the MADE group);
- provide the FWO with details of the systems and processes implemented as required above, including record-keeping arrangements and payslips;
- provide compliance training to all HR, recruitment, payroll and managerial staff;
- submit to annual audits of pay and conditions for a sample of employees by an external auditor or employment law specialist;
- cooperate with the FWO if any further allegations of non-compliance are made by employees or former employees;
- publish written public apologies on MADE’s own social media and websites and in both mainstream and industry media publications (the wording for the apologies has been agreed in the undertaking);
- promote general deterrence in the restaurant industry and education of industry leaders by Calombaris engaging in 8 speaking engagements at national industry events over the next 3 years. He must ‘include, prominently, spoken content which communicates the need for compliance with workplace laws and the consequences of not doing so … and otherwise communicated in a manner that is consistent with George Calombaris’ usual language and style’ (whatever that means!).
FWO chief Sandra Parker stated that:
The Court-Enforceable Undertaking commits MADE Establishment to stringent measures to ensure that current and future employees across their restaurant group are paid correctly …
MADE’s massive back-payment bill should serve as a warning to all employers that if they don’t get workplace compliance right from the beginning, they can spend years cleaning up the mess.
Really? If you are George Calombaris, would you prefer to do a round of industry talks about your ‘wage theft journey’ that could be mildly embarrassing (although who will really be keeping a close eye on what he actually says when the time comes?) – or be dragged through a court process and made an example of by a judge (who, as well as imposing penalties and requiring back-pay, could also make orders including most of the steps set out in the FWO’s undertaking).
What the whole sorry saga really highlights, though, is the need for the re-elected Morrison Government to move quickly to implement the Migrant Workers Taskforce’s recommendation to introduce criminal sanctions for ‘clear, deliberate and systemic’ cases of worker exploitation including underpayments (discussed in this previous post).
The Government, probably not expecting to be re-elected, accepted this recommendation in principle. It said that adding criminal sanctions will send a strong message to employers who think they can get away with exploitation of vulnerable employees, and the Government would consider the circumstances and vehicle for applying criminal penalties to serious and deliberate exploitation.
So where is the legislation implementing the Taskforce’s recommendation? Or is the Government going to take its time? Does it accept that the MADE group’s almost $8 million breaches were just ‘accidental’ as the Chief Executive of Restaurant & Catering Australia said on Radio National (23/07/19) and Calombaris himself has claimed?
Underpayment of workers is the same as any other form of stealing. It’s time that the consequences matched the crime.