Eagle Boys franchisee fined $30,000 for underpaying staff, lack of experience blamed

The operators of an Eagle Boys pizza franchise have been fined $30,000 for underpaying staff by more than 50% below the minimum legal wage, with a magistrate deciding the pair “completely lacked business experience”.

But although the Federal Magistrates Court found the underpayment occurred out of ignorance rather than malice, it comes during a time when entrepreneurs in the hospitality industry are lobbying the Federal Government to reduce penalty rates over fears more businesses will be forced to close.

Already this year, the industry has warned more businesses have been closing on Sundays due to penalty rates.

The Fair Work Ombudsman confirmed this morning the company behind the Eagle Boys franchise in Cessnock, New South Wales, has been fined $30,000 and ordered to pay back more than $38,000 owed to 13 employees.

The amounts owed range from as low as $1,280 to $11,478, with the underpayments occurring between October 2008 and June 2010.

Eagle Boys was contacted this morning, but a reply wasn’t available before publication.

In her 26-page judgment, Magistrate Shenagh Barnes instructed Stacborn, which runs the franchise, to remedy all payments by the end of the year.

But she also said the husband and wife team operating the franchise, Peter and Margaret Stacey, were ignorant rather than malicious about the underpayments.

Barnes pointed out the pair “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,” Barnes said.

“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.

Fair Work Ombudsman Nicholas Wilson repeated the sentiment in a statement, and said it reminds businesses that “underpayment of young, vulnerable employees is a serious matter”.

This story first appeared on SmartCompany.