Celebrity status no excuse for underpayment of wages

Following an investigation by the Fair Work Ombudsman (FWO), Made Establishment, celebrity chef George Calombaris’ hospitality empire, has been found to have underpaid more than 500 employees.

The celebrity chef self-reported an underpayment to the FWO when it came to his attention following a change of management in 2017. He initially thought the underpayment was in the vicinity of $2 million. However, the FWO have identified that the underpayment is in fact in excess of $7.8 million.

The major problem for Mr Calombaris’ company was the misuse of annualised salaries for his Award covered employees. It would appear that his company, like many employers, did not understand the complexities associated with ensuring Award compliance, particularly where employees work a variety of different shifts.

Mr Calombaris appears to have avoided prosecution for the breaches of the Fair Work legislation and has agreed to a creative punishment. The celebrity chef must complete 7 public speaking engagements encouraging workplace compliance. His hospitality company will also be required to make a "contrition payment” of $200,000 as part of a novel enforceable undertaking. He was also required to make a public apology.

In addition to the above, Made Establishment must conduct annual audits for the next 3 years and provide the FWO with the results. They are also required to roll out Industrial Relations training to all of their employees in HR, recruitment, on-site management and payroll employees.

This case demonstrates how easy it is to make a mistake when paying employees and how expensive it is to rectify the problem. It is imperative that all employers understand if their employees are covered by an Award, and if so, what that means exactly in terms of remuneration. Where employers seek to streamline the payment processes with annualised salaries or ‘all up’ hourly rates of pay, this is often possible, however such arrangements should only be entered into after expert industrial relations advice has been obtained and appropriate employment contracts or agreements have been entered into.

To ensure your organisation is compliant or to explore options for effectively streamlining your wages payments, contact Cheryl-Anne Laird, Partner of our Human Resources division, on +61 7 3218 3919.

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 Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.

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