Legal action has been initiated against the franchisor and franchisee of three popular Hobart bakeries, as allegations of underpayment of more than $1.25 million to over 100 young staff members have come to light.
The Fair Work Ombudsman (FWO) claims that Bakers Delight outlets in Kingston, Lindisfarne and Eastlands underpaid a total of 142 employees, some as young as 14, between July 2017 and October 2020.
“Alleged individual underpayments range from $74 to, in one case, a young apprentice baker being underpaid $106,281,” the FWO said.
“All alleged underpayments remain outstanding.”
The FWO investigated the Kingston, Lindisfarne and Eastlands Bakers Delight outlets in response to intelligence gathered about potential non-compliance at the outlets.
Fair Work Inspectors allegedly discovered that staff were underpaid entitlements including minimum wages, weekend and public holiday penalty rates, overtimes rates, leave entitlements and minimum shift pay and had money unlawfully deducted from their termination pay.
Acting Fair Work Ombudsman Kristen Hannah says the legal actions highlight that franchisors can be held accountable if they fail to take action to prevent breaches in their networks.
“We will use all laws and powers at our disposal to ensure franchisors are held to account when they fail to address non-compliance in their networks,” Ms Hannah said.
“In this case, we allege Bakers Delight Holdings was aware many young workers at these three Hobart stores had been underpaid but failed to take reasonable steps to prevent further underpayments occurring.”
“All business operators need to be aware that the FWO prioritises protection of vulnerable workers, including young workers. Any workers with concerns about their pay or entitlements should contact us.”
The FWO alleges that Bakers Delight Holdings is accountable for $642,162 in underpayments that occurred at the three stores after February 2019.
Despite becoming aware of the franchisee’s underpayment practices, the franchisor allegedly failed to take any preventive action.
It is further claimed that the franchisee should have known that further underpayments were likely to occur.
Legal action is also being pursued against John Vince Puglisi and Lisa Kay Puglisi, the owners and managers of the three stores, as well as their company, Make Dough Enterprises Pty Ltd.
The couple’s company, which directly employed and underpaid the affected workers, was placed into liquidation earlier this year when the three stores were closed.
Bakers Delight Holdings could face penalties of up to $66,660 per contravention, while Make Dough Enterprises may face penalties of up to $66,660 per contravention or $660,000 per serious contravention.
Mr and Ms Puglisi could be penalised up to $13,320 per contravention or $133,200 per serious contravention.
The FWO is also seeking court orders that will require Bakers Delight Holdings, Make Dough Enterprises, Mr. Puglisi, and Ms. Puglisi to rectify the underpayments, including interest and superannuation.
The case management hearing is scheduled to take place in the Federal Court in Hobart on July 26.
