MasterChef or MasterCrook?

George Calombaris, celebrity chef and famous judge on MasterChef Australia, through his Company, Made Establishment, has been found to have underpaid more than 500 staff to the tune of $7.8 million. Last week, under a court-enforceable undertaking with the Fair Work Ombudsman, the embattled chef and his company is required to pay $200,000.00 as a ‘contrition payment’. George has blamed ‘error’ in systems and processes.  

But many believe that George is ‘lucky’ as it could’ve been much-much worse.

The many breaches uncovered during a four-year investigation by the Fair Work Ombudsman include failing to pay employees minimum award rates, penalty rates, casual loadings, overtime rates, split-shift allowances and annual leave loadings.

Despite the Company recompensing most monies to current and past employees, the Company is required to pay the amount of $200,000 as well as implementing new payroll and compliance systems across his group of Companies. These systems will be subject to reviews by the Ombudsman.

There is no suggestion that George was personally ‘involved’ in underpaying staff but, section 550 of the Fair Work Act 2009 provides that in certain circumstances, ‘a person involved’ in a contravention can be held personally liable for that contravention of the Fair Work Act.     

A person is involved in a contravention only if, the person:

1. has aided, abetted, counselled or procured the contravention; or
2. has induced the contravention, whether by threats or promises or otherwise; or
3. has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
4. has conspired with others to effect the contravention.

The most controversial form of ‘involvement’ is at point c. Applying the section to George, it is arguable that as a director, George and the manager in charge of payroll are likely to be ‘…indirectly…knowingly concerned in or party to’ the underpayments. These provisions are far-reaching and could result in significant consequences for business owners. Directors must therefore ensure that the business has the appropriate systems and processes in place to ensure the business is not in breach of the Act, and to ensure employees are not underpaid their minimum entitlements.

And as for George, despite settling the matter with the Ombudsman, and despite fixing the problems within his business into the future, it still may take some time before he is to regain the trust of the public at large.

So, whether or not you believe George is a master chef or master c(r)ook, his story must serve as a lesson to everyone who is taking the responsibility of employing someone in their business.

If you have further questions, please contact Philip van den Heever at philip@franklaw.com.au.

This is not legal advice. 

Image by Visual Playground, http://visualplayground.com.au/portfolio-item/masterchef-2014/