1 July 2014
A cafe in Perth has landed in hot water after a workplace investigation from the Fair Work Ombudsman (FWO) discovered the company had been making unlawful deductions from employees' wages.
The FWO has ordered the cafe to pay thousands of dollars in penalties and compensation to cover inappropriate pay check diminution over the past two years. These deductions were applied to staff members’ wages as a punishment when individuals made mistakes in the workplace.
In particular, the company had taken $112 from a cook's pay packet after her employer decided the crackling was "not crispy enough" on a pork belly dish. Further occasions of wage docking included $12 for overcooking a waffle, $30 for placing tomato in the wrong layer of a club sandwich and $100 for turning up to work more than 5 minutes late.
"Deducting money from employee wages as a punishment, or as some sort of performance management tool, is completely unlawful," Ombudsman Natalie James explained in a 26 June media release.
Ms James continued to add that punishments such as deducting wages are not constructive or efficient methods of encouraging employees to improve their performance.
"Research shows that employees are most productive and motivated when they are part of a workplace culture in which their contribution is valued and there are strong, positive leaders who encourage them to perform at their best," she said.
The workplace investigators working through the FWO also found the cafe was failing in its duty to issue pay-slips and record time and wages. The FWO stated it will continue to monitor the business on an ongoing basis to ensure compliance in the future.
Other businesses across Australia should take this case as a warning and may be wise to review current practices which may be seen as unfair or even unlawful when scrutinised. Compliance breaches can cost the business not only in monetary terms but can also damage reputation, staff morale and retention.
"As a rule of thumb, deductions from wages are generally unlawful if they are not authorised by the employees in accordance with workplace law and are not principally for the benefit of the employees," Ms James cautioned.
"Clearly these deductions only benefited the employer, which is why we have taken this matter seriously and sought a commitment from the business this behaviour will not be repeated."
For advice about your compliance obligations as an employer and good practice guidance, or to discuss an independent workplace investigation or inquiry, get in touch with iHR Australia on 1300 884 687 or make an online enquiry.
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