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FWO slams restaurant over contracts used to avoid wage obligations

Thursday, 14 March 2013 | By Yolanda Redrup

The owner of a Canberra restaurant has been fined over $16,000 for using individual contracts to try and avoid paying minimum wage obligations.


Damien Trytell, the operator of the Mecca Bah restaurant at Manuka, was fined $16,170 after underpaying 26 employees a total of $50,996.


The 26 employees, 11 aged between 18 and 20 at the time, were underpaid between May and December 2009. They worked on a full-time, part-time or casual basis as kitchen staff and waiters at the restaurant.


The staff have not yet received any back-pay and Federal Magistrate Warwick Neville ordered the fine go toward rectifying the underpayments.


According to the unlawful individual contracts devised by Trytell, the workers were paid flat hourly rates ranging between $15.93 and $19.23. This resulted in the underpayment of employees' penalty rates for night, overtime, weekend and public holiday work. Some were also underpaid casual loadings and annual leave pay.


Legally, the restaurant staff were entitled to $38 an hour in penalty rates.


SmartCompany contacted Mecca Bah but received no response prior to publication.


Neville said in his judgement Trytell had taken active steps to circumvent legal obligations and establish a mechanism wherein employees were not paid their entitlements and were no longer subject to award rates.


"It is a significant matter for a company or an individual to seek to contract out of its or their obligations by entering into separate agreements with each of the employees," he said.


"It is important for a clear message to be sent to other employers that obligations to workers cannot be avoided or otherwise attenuated in any way."


Industrial relations lawyer Peter Vitale told SmartCompany it's not uncommon for employers to encourage employees to accept a flat-rate wage.


"It's not unusual for small employers to try and give some certainty to their wage obligations and to encourage employees to accept the flat hourly rate, but the problem in this case is the hourly rate didn't take account of weekend and overtime rates.


"Most employers who go down this path will try to build something in which accounts for penalty rates, but unless you know exactly how many hours each employer is going to work, it's a difficult to get right. It requires careful monitoring to ensure legal obligations are being met," he says.


TressCox Lawyers partner Rachel Drew told SmartCompany cases like this were more frequent under Work Choices.


"We haven't seen cases like this for the last few years. During Work Choices it was quite common, but it's never been the law that you can underpay people in this way as the case describes. Under Fair Work more people have been aware of their legal obligations.


Vitale and Drew say the case reflects the FWO's focus on vulnerable workers.


"The comments of the ombudsman reflect once again that a lot of its resources are focused on sending a message to employers about exploiting vulnerable groups," Vitale says.


This story first appeared on SmartCompany.