Fair Work Ombudsman
Citation: FWO-2024-06-05-85-degrees-franchisor-penalty-media-release
At a glance
- Penalty
- $1,440,000
- Employees affected
- 9
- Awards cited
- MA000035
What happened
The Fair Work Ombudsman took legal action against 85 Degrees Coffee Australia Pty Ltd, the franchisor of the '85 Degrees' brand in Australia. The case involved nine workers employed at eight franchisee-operated outlets in Sydney between 2019. These workers, including young workers and visa holders, were underpaid a total of $32,321. The franchisor did not directly underpay the workers but was held liable for the franchisees’ actions. Previous penalties and an enforceable undertaking were already in place regarding compliance issues.
What was decided
The Federal Court imposed penalties totalling $1.44 million against 85 Degrees. This decision is based on the franchisor's 'systematic failure to ensure compliance' within its franchise network. The court found the franchisor should have known about and prevented the underpayments and record-keeping contraventions. The workers received full back-payments from the franchisees. Justice Robert Bromwich found a 'systematic failure to ensure compliance'.
What it means for employers
Franchisors are responsible for ensuring compliance within their franchise networks. They can be held liable for the actions of franchisees if they knew or should have known about potential contraventions and failed to take reasonable steps to prevent them. This case highlights the importance of proactive compliance measures, especially for international chains.
What it means for employees
Workers, particularly young workers and visa holders, should be aware of their pay and entitlement rights. If they suspect they have been underpaid or are experiencing other workplace issues, they should contact the Fair Work Ombudsman.
Every statement above is drawn from the published decision. Read the original here:
https://www.fairwork.gov.au/newsroom/media-releases/2024-media-releases/june-2024/05062024-85-degrees-franchisor-penalty-media-releaseWant more cases like this?
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This summary was drafted by AI from the published decision and reviewed before publishing. It is general information, not legal advice. For your specific situation, speak to the Fair Work Ombudsman (13 13 94) or a qualified lawyer. About these summaries & corrections →