Watchdog Bites Back at Bavarian Group

14 October, 2009 by TheShout

By Andrew Starke

The Bavarian Hospitality Group (BHG), the operator of a string of Sydney nightspots, will face court next week for allegedly underpaying hundreds of its hospitality staff.

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The company, which is currently leading Sydney’s Oktoberfest celebrations, is accused of short-changing more than 800 casual employees a total of $334,000.

The underpayments were uncovered following a series of surprise night-time visits by the Fair Work Ombudsman to Sydney bars and hotels last year.

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The random calls were part of a national campaign which ultimately recouped $1.1 million in underpayments for 3863 hospitality employees.

BHG has co-operated with the Fair Work Ombudsman and reimbursed the money.

However, the agency says it will still prosecute because of the significant amount involved for the mostly young and low-paid workers.

The Fair Work Ombudsman has initiated legal action in the Chief Industrial Magistrate’s Court in Sydney.

It alleges the group underpaid about 800 workers more than $334,000 between October 2007 and November 2008.

They worked at Lowenbrau Keller (CBD), Bavarian Bier Café (Manly, York Street, O’Connell Street, Entertainment Quarter and Parramatta), Uber Bar (CBD) and The Argyle (CBD).

Court documents reveal that Bavarian signed employees to workplace agreements in 2007 which paid slightly above the minimum hourly rate at that time, but which did not account for future increases.

This allegedly resulted in the workers getting less than the minimum hourly rate when rates rose on October 1, 2007.
The largest underpayment for a single worker was $3,642.

Contacted by TheShout, Bavarian Hospitality Group MD, John Szangolies, attributed the error to some advice the group had received on pay rates that turned out to be incorrect.

“During the period in question our total wages bill was somewhere in the vicinity of $15million and we underpaid our staff by $334,000, or around 2 percent of our total salary bill,” he said.

“As soon as the breach was pointed out to us we made every effort to redress the situation as fast as we could and BHG immediately corrected the rates.”

As the owner and director of BHG, Szangolies has formally apologized for the error and committed the company to ensuring that it is not repeated.

“2008 was a period of rapid growth for our business and we must ensure that as we grow, and our great employees enjoy the benefits of an expanded group of outlets, that we never make the same mistake again,” he said.

“Since the issue was raised with us BHG has added two new venues and created an additional 60 new positions despite the current economic environment.”

However, Fair Work Ombudsman executive director, Michael Campbell, said the agency would seek a penalty against the company for the breach. It faces a maximum fine of $33,000.

The case was listed for a hearing last week but this is now only expected to take place on Monday October 19.

TheShout understands that this will be a preliminary hearing and a verdict is not expected before Christmas.

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