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Fair Work Ombudsman fines Master Franchisor for accessorial liability

November 13, 2016

Accessorial liability provisions have been used by the Fair Work Ombudsman (FWO) to secure substantial penalties across the chain of command of frozen yoghurt franchise, Yogurberry, for underpaying four overseas workers.

Yogurberry fined

Under s 550 of the Fair Work Act 2009 (Cth) (the Act) accessorial liability means that a person who is involved in a contravention of the Act is held responsible for that contravention. For example, a person is personally involved in a contravention if they:

  • have induced the contravention, whether by threats or promises or otherwise;
  • have been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention.

Justice Geoffrey Flick found that the master franchisor of the Yogurberry chain was directly involved in determining pay rates and that the exploitation occurred despite warnings from the FWO.

Almost half of the penalties were against companies in the Yogurberry Group who were found to be accessories to the exploitation of workers.

The fines included:

  • Yogurberry World Square Pty Ltd, which directly employed the workers: $75,000
  • YBF Australia Pty Ltd: $25,000
  • The Yogurberry Group’s payroll company, CL Group Pty Ltd: $35,000
  • YBF Australia part-owner Soon Ok Oh: $11,000

The employees, who were on 417 visas, spoke very little English and were paid as little as $8 an hour, which is far below the Fast Food Industry Award 2010 (the Award) base rates. Under the Award, the employees should have been paid $14.82 and $18.52 per hour. Other workplace laws such as classifications, minimum shifts and record keeping requirements were also contravened.

Yogurberry is now obligated to complete a national external audit of the franchisor, must undertake workplace relations training and must also pay for the FWO’s legal costs.

Fair Work Ombudsman, Natalie James says “Yogurberry finds itself in this situation- penalised and publicly shamed- because it ignored our clear warnings that it needed to address exploitation occurring in its stores.”

“The outcome of this matter, along with other recent scandals, clearly illustrates the consequences for companies who fail to meet their legal obligations and community expectations in relation to treatment of vulnerable workers in their networks.”

This case serves as a reminder to all employers that they must be up to date with current legislation and that they can be held personally accountable if they are involved in a contravention.

If you require more information or would like to receive training in workplace relations, please call 1800 RETAIL to speak with one of our Advisors.

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