Legal E: Large Penalties - Pizza and Soft Drink as pay

This week's Legal E outlines a recent case involving La Porchetta in Melbourne. The focus is on underpayment of wages and the issue is relevant to all employers, particularly with the wage increases that apply from 1 July 2014.

Two companies operating two outlets of the franchise La Porchetta in Melbourne, have been fined and forced to back pay a total of $334,818 for giving pizza and soft drink to employees in lieu of wages by the Fair Work Ombudsman. The owner of the two companies was personally fined $55,803.00 in addition to the fines imposed on the companies.

A number of the employees were young; some on apprenticeships and traineeships for which the two companies had been paid Commonwealth benefits.


Underpayments made were caused by incorrect flat rates instead of differing Award and penalty rates being applied, not being paid minimum hours and underpayment of leave entitlements. Lack of cooperation during the Ombudsman's investigation and failure to keep records were also factors in the decision handed down.


The Decision  


This decision sends a strong and clear message of intolerance towards the exploitation of the young and vulnerable, the safety net of employer's obligations, personal responsibility of directors of companies or managers and the effective enforcement of same.


Preventative Action in the Future


As a consequence of the findings, the La Porchetta group as a whole has taken action to ensure that such breaches do not occur again, entering into a Pro-Active Compliance Deed with the Fair Work Ombudsman that requires it to self-audit stores, provide new franchisees with employment induction training and employment packs covering key aspects of workplace laws, provide annual wage updates and appoint an employee liaison office to deal with complaints.


New Wage Rates Now Online


This morning the Fair Work Ombudsman updated its website with pay guides showing wage rates commencing under each Award on 1 July 2014. The guides also show common penalty rates applicable but do not cover all situations.


If you are in doubt as to what the relevant wage rates are at any time, it is urged that you act immediately to find out. Ignorance is not a defence. Working with the Fair Work Ombudsman and taking a pro-active approach to wage review will save significant expense, stress and personal loss in the future.


For more information please contact:


Joanna Andrew, Partner

Ph: 8414 3454



Elizabeth Olsson, Senior Associate

Ph: 8414 3413


Practice Area: Employment

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