The franchisor of the 85 Degrees cafe chain in Australia has been fined $1.44 million for underpayments at its franchisee outlets in Sydney. 85 Degrees Coffee Australia, operating in NSW and the ACT, was penalised for a “systematic failure to ensure compliance within its franchise network” according to the Fair Work Ombudsman (FWO).
The FWO's proactive audits in 2019 uncovered that nine workers at eight 85 Degrees locations in Sydney were underpaid a total of $32,321. These underpayments included deficiencies in minimum rates, overtime entitlements, penalty rates, casual loadings, laundry allowances, and annual leave entitlements. Despite not directly underpaying workers, 85 Degrees was held liable under the responsible franchisor entity provisions.
Fair Work Ombudsman Anna Booth stated, “85 Degrees’ conduct in this matter was completely unacceptable”. The company had been previously warned about compliance issues but failed to address them effectively.
This penalty follows previous fines, including $475,200 in 2022 for exploiting young Taiwanese students, and an Enforceable Undertaking in 2015 for underpayments and record-keeping failures.
This case underscores the critical importance of robust wage compliance systems. Franchisors must implement comprehensive measures such as accurate wage processing and real-time monitoring to avoid legal liabilities and protect their brand reputation. Prioritising compliance is essential for safeguarding workers' rights and maintaining a trustworthy franchise network.
Comments