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Bakers Delight Franchisor Faces Serious Allegations Over Wage Underpayment

The Fair Work Ombudsman (FWO) is taking legal action against renowned bakery franchise, Bakers Delight, accusing it of neglecting to stop its franchisees from underpaying staff. The accusation comes in the wake of revelations that the head office was aware of the wage theft but did nothing to intervene.

The FWO is attributing $640,000 of the $1.25 million in purported underpayments to Bakers Delight Holdings. An audit carried out in February 2019 revealed the wage discrepancies and compliance issues at Make Dough Enterprises, a Bakers Delight franchisee that runs three Hobart stores under the management of John and Lisa Puglisi.

Bakers Delight requested Make Dough Enterprises to implement certain measures to rectify the non-compliance issues, however, the franchisee declined to comply. Consequently, Bakers Delight is being faulted for not taking further steps.

The claims against Bakers Delight are confined to underpayments spanning from February 2019 – the time the infringements were discovered – until October 2020. The FWO argues that Bakers Delight is culpable for these underpayments, as it should have foreseen the continued underpayments given its failure to take corrective action.

This case marks the second occasion that the FWO has applied the 2017 vulnerable workers legislation to make a franchisor accountable for the alleged illegal actions of a franchisee.

Meanwhile, Make Dough Enterprises, accused of underpaying 142 baking and sales staff at their Hobart stores a total of $1.25 million between July 2017 and October 2020, could face penalties that are ten times the norm for “serious contraventions.” The company is believed to have persistently underpaid workers, while neglecting to meet the minimum rates set out in the General Retail Industry Award.

The underpayments that are yet to be settled, mainly affecting young workers, range from $74 to $106,000. Penalties could see a significant increase as a result of these continued underpayments, post the confrontation with Bakers Delight in February 2019.

The FWO’s investigation following “intelligence gathered about potential non-compliance” uncovered that Make Dough failed to honour “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 Ombudsman, Kristen Hannah, issued a stern warning to employers, emphasizing the commitment of the FWO to holding franchisors accountable when they ignore non-compliance within their networks. She highlighted the importance of protecting vulnerable workers, including young workers, who are prioritized by the FWO.

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