The head franchisor of the 85 Degrees cafe brand in Australia will face the Fair Work Ombudsman in court for alleged contraventions by its franchisees.
It marks the first time the Ombudsman has commenced legal action against a franchisor, with the Ombudsman arguing 85 Degrees Coffee Australia Pty Ltd is legally liable for alleged underpayments as it “should have reasonably known its franchisees would underpay workers”.
“Under federal law, where franchisors operating in Australia do not take reasonable steps to prevent contraventions by their franchise outlets, we will act,” says Fair Work Ombudsman Sandra Parker.
“In this case we allege 85 Degrees – who had been on notice for many years about compliance issues – should reasonably have known some of its franchisees would underpay their workers and breach record-keeping and pay slip requirements.”
It’s believed a total of 20 workers were affected by workplace contraventions including underpayments as well as record-keeping and pay slip issues.
It’s alleged nine Sydney workers were underpaid $32,321, with underpayments ranging from $239 to $15,198.
The individual franchisees back-paid the workers in full as a result of the FWO’s proactive audit and the Fair Work Ombudsman has not taken court action against the franchisees.
The Fair Work Ombudsman is seeking penalties against 85 Degrees Coffee Australia Pty Ltd in relation to multiple contraventions of the Fair Work Act. The company faces penalties of up to $63,000 per contravention.
85 Degrees was penalised $475,200 in court last year for an internship arrangement with Taiwanese students who worked at cafes and factories operated by the company in Sydney.