The Australian franchisor of Bakers Delight will face the Fair Work Ombudsman in court for its reported role in 142 staff allegedly being underpaid a total of $1.25 million.
The Fair Work Ombudsman is taking legal action against Bakers Delight Holdings Pty Ltd in relation to a portion of the alleged underpayments, which totals $642,162, as well as the franchisee of the now-closed stores Make Dough Enterprises Pty Ltd run by John Vince Puglisi and Lisa Kay Puglisi.
Workers employed at Hobart outlets in Kingston, Lindisfarne, and Eastlands, are said to have been underpaid between July 2017 and October 2020.
However, the franchisee of the three stores reportedly became aware of the underpayments in February 2019 and failed to take preventative action to stop additional underpayments taking place.
Bakers Delight Holdings commissioned an audit that was completed in February 2019, which identified underpayments and other non-compliance issues at the three stores, with the Fair Work Ombudsman arguing the franchisor “either knew or should have reasonably known the workers … would be underpaid”.
While it’s believed Bakers Delight Holdings provided the findings to John Vince Puglisi and Lisa Kay Puglisi and requested them to address the issues, it’s alleged the couple refused to take action. Bakers Delight Holdings reportedly did not take further action.
The couple are accused of directly employing and underpaying staff – some who were as young as 14 and many who were on visas – overtime rates and continuing to pay workers minimum rates rather than revised annual rates.
In the most extreme case, an apprentice was allegedly underpaid $106,281.
Make Dough Enterprises and Lisa Kay Puglisi are also accused of providing false records to the Fair Work Ombudsman, with John Vince Puglisi failing to comply with notices to produce documents alongside his wife and the business.
Make Dough Enterprises was placed into liquidation this year in line with the closure of the three Bakers Delight stores.
Huge penalties can be imposed on Bakers Delight Holdings and Make Dough Enterprises, which face up to $66,660 per contravention or $660,000 per serious contravention.
The Puglisi couple face penalties of up to $13,320 per contravention or $133,200 per contravention.
The Fair Work Ombudsman has confirmed it has used franchisor liability provisions in the Fair Work Act for the second time, which means a franchisor is legally liable for unlawful condut of a franchisee.
“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,” says Acting Fair Work Ombudsman Kristen Hannah.
“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.”
The Fair Work Ombudsman is seeking court orders to require all underpayments to be rectified plus interest and superannuation.
The first case management hearing is scheduled for 26 July 2023.