George Calombaris faces questions over delays for delivering back pay to workers

The Fair Work Ombudsman says inquiries into the George Calombaris-owned Made Establishment hospitality business are continuing, as the company admits it is taking longer than expected to repay staff after “poor processes” led to some workers being underpaid at its restaurants.

Despite staff being asked to lodge claims over suspected underpayments with the company by June 30, there have been delays over the processing of some backpay claims that could take up to another year to be fully resolved, according to Fairfax.

In April, Calombaris said he was “devastated” after an audit of the business by KPMG found payroll problems had led to some staff being underpaid for shifts worked.

The group, which operates a number of Melbourne eateries, including The Press Club, Hellenic Republic and Gazi, began the voluntary process of rectifying the payments and said it would work with the Fair Work Ombudsman on the process.

At the time, the company said it had already paid 162 current and former employees a total of $2.6 million in back pay.

Fairfax reports Made Establishment chief executive Troy McDonough confirmed last week that the time needed to “accurately assess each claim is substantially greater than what we first anticipated”.

In a statement to SmartCompany this morning, the company stressed that all current staff members had their pay rectified on the day the company self-reported the concerns to the Fair Work Ombudsman.

Concerns around delays appear to be related to former staff members coming forward with details of their employment. The hospitality business says it understands the frustrations of its workers and is processing new claims each week.

“We have employed additional resources to help in calculating and reconciling the entitlements, some of which go back six years,” the company said.

This morning a spokesperson for the Fair Work Ombudsman’s office told SmartCompany its inquiries into the Made Establishment group “remain ongoing”.

However, the office was also critical of the timeframe for resolution on the claims.

“While we appreciate that large scale reconciliations can take considerable time and resources, we do not believe it is reasonable for former employees to have to wait this long to receive wages owed to them”, a spokesperson for the Ombudsman’s office said.

Make sure systems work before concerns arise

Chris Molnar, an employment, IR and workplace safety partner at TressCox Lawyers, says businesses should keep in mind that once any employee underpayments have been identified, time is of the essence to resolve these.

“It’s very very important for this sort of business to move in very quickly,” Molnar tells SmartCompany. 

If a business believes underpayments may have occurred, Molnar recommends thinking about the kind of expertise needed to review the business’ HR and payments processes, and then getting those professionals on board as soon as possible to make sure any internal reviews are accurate and swift.

“A business needs to assemble a team, with accountants who have expertise like forensic accounting. You need a specialist workplace relations lawyer on that team,” he says. 

“If you assembled that team, I think you ought to be able to identify the major risk areas reasonably quickly.” 

It’s vital employers keep accurate records of staff and payments, because when reviewing concerns about underpayments, a lack of information can slow down the claims process significantly, Molnar says.

If a business identifies a problem with its processes, it is likely that voluntarily coming forward with this information could have an impact on the degree of penalty that could be imposed by a court or the Fair Work Ombudsman if the case ever goes to a hearing, Molnar says.

However, just because a business puts its hand up and admits to a mistake, does not mean the Ombudsman or courts can’t also follow this up.

Employees still have the option of reporting their concerns to the Ombudsman, or alternatively, can take the business directly to court, in which case “they don’t have to wait for the business to investigate these matters,” Molnar says.

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