Operator of pizza outlet fined $30,000 for underpaying young, vulnerable staff

1 October 2012

Note: Reference to prosecution in this media release is a general reference to the FWO commencing proceedings for the imposition of civil penalties and should not be taken to be a reference to criminal proceedings.

A company which bought a country pizza franchise and paid some staff a flat hourly rate almost 50 per cent below the minimum legal wage has been fined $30,000 and ordered to back-pay more than $38,000 still owing to 13 employees.

The Federal Magistrates Court in Sydney has imposed the penalties following an investigation and prosecution by the Fair Work Ombudsman.

The underpaid workers, most of them pizza delivery drivers, are owed as much as $11,478, with several owed amounts totalling $8951.75, $4930.86, $3639.86, $1886.93, $1449.04 and $1280.18.

Federal Magistrate Shenagh Barnes has instructed Stacborn Pty Ltd, which runs an Eagle Boys pizza franchise at Cessnock, in regional NSW, to remedy all outstanding entitlements to its employees by December 31 this year.

However, she has given the company - owned by husband and wife Peter and Margaret Stacey - 12 months to pay the $30,000 penalty after hearing evidence that Stacborn was struggling financially and the business was for sale.

Stacborn underpaid two shop assistants and 17 delivery drivers a total of $48,905 between October, 2008 and June, 2010 when it paid the staff - 12 of them juniors and four from a non-English speaking background - a flat hourly rate below the minimum wage.

It has since back-paid about $10,500.

In a 26-page decision, FM Barnes says the underpayments are “significant”, but accepts the contraventions are the result of ignorance on the part of the Staceys, whom she said had never previously operated a retail outlet and “completely lacked business experience”.

“Indeed, Mr Stacey had for some nine years worked as a casual pizza delivery driver for the previous owner of the business. Thereafter he paid the delivery drivers the same hourly rate that he had been paid,” FM Barnes said.

Nevertheless, the FM Barnes ruled that “the law should mark its disapproval of contravening conduct and set a penalty which serves as a warning to others”.

“The penalties should be set at an amount that make it clear that failing to comply with minimum obligations will not be tolerated by the courts,” she said.

“The breaches represented significant underpayments to young and vulnerable employees. There is a need for general deterrence.”

Fair Work Ombudsman Nicholas Wilson says the decision should remind all employers that underpayment of young, vulnerable employees is a serious matter.

Employers and employees seeking information and advice should visit www.fairwork.gov.au or call the Infoline on 13 13 94 from 8am-6pm weekdays.

Media inquiries:

Penny Rowe, Media & Stakeholder Relations
0457 924 146

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