6 December 2024

The Fair Work Ombudsman has secured penalties totalling $104,000 against the operators of a hotel and café in regional Victoria after nearly 100 staff at the venue were underpaid more than $320,000.

The Federal Circuit and Family Court has imposed a $95,000 penalty against Louise Maree Melotte and a $9,000 penalty against her husband Travis Francis Melotte.

The married couple operate Hotel Frangos and Café Koukla in Daylesford.

Ms Melotte admitted her involvement in underpaying 97 staff at Hotel Frangos and Café Koukla on Vincent Street in Daylesford a total of $321,202 between May 2017 and July 2019.

Ms and Mr Melotte both also admitted they were involved in requiring two Nepalese cooks on salaries to work unreasonable additional hours, in breach of the Fair Work Act.

In addition to the penalties, in August the Court ordered Ms Melotte to back-pay all workers, plus superannuation.

The underpaid workers included 15 juniors, aged between 15 and 20 at the time, and some visa holders, from countries including Nepal, Pakistan and Armenia.

Fair Work Ombudsman Anna Booth said the exploitive conduct was alarming and welcomed the penalties.

“It is unacceptable that nearly 100 workers were deliberately underpaid. That young and migrant workers were some of those left out of pocket is also concerning, particularly the exploitation of the two cooks who were requested or required to work unreasonable long hours,” Ms Booth said.

“These penalties and back-pay order send a clear message that all employees must be paid their basic minimum lawful entitlements, and employers who deliberately pay insufficient salaries will be met with enforcement action.

“We treat cases involving underpayment of visa holders and young workers particularly seriously and continue to prioritise matters involving such vulnerable workers.

“Any workers, including visa holders, with concerns about their pay or entitlements should contact us.”

The FWO investigated after receiving requests for assistance and discovered most of the underpayments related to 27 full-time employees who were paid salaries in weekly instalments irrespective of hours worked and when these hours were worked. This resulted in underpayments under the Hospitality Industry (General) Award 2010. Four of these workers were underpaid more than $20,000.

The two Nepalese cooks who were required to work unreasonable hours were underpaid individual amounts of $48,516 and $32,815.

The two cooks, who were on Regional Sponsored Migration Scheme visas, were required to work an average of almost 50 hours per week 90 per cent of the time. On one occasion, one of the cooks worked 74 hours in a week. The additional hours had a significant impact on the two cooks to the detriment of their own health, safety and personal circumstances.

The other underpaid staff were casuals who were underpaid entitlements including minimum wage, casual loading, overtime rates, penalty rates, no meal break penalties and minimum engagement pay.

The underpaid workers included food and beverage attendants and cooks, as well as two guest services staff and one clerical worker.

Judge Heather Riley found the underpayments were deliberate and significant and “should have been paid to the affected employees between five and seven years ago.”

“Ms Melotte has had the benefit of the $321,202 for many years. It has no doubt improved her lifestyle at the expense of the affected employees,” Judge Riley said.

Judge Riley accepted the FWO’s submission that the long working hours had a significant impact on the two cooks who had both experienced mental and physical health issues, and that one of the cooks lost 16 kilograms during his employment and was hospitalised due to being “exhausted and unwell”.

Judge Riley also accepted the FWO’s submission that “each additional hour of work had the effect of lowering” the two cooks’ hourly rate of pay to “unacceptable, exploitative levels” with one cook paid in some weeks between $20 and $12 per hour and the other paid from $30 to $13 per hour.

Her Honour accepted that Ms and Mr Melotte made full admissions, however, noted that they were not made at the first opportunity.

Judge Riley found that Ms and Mr Melotte were “not particularly remorseful”.

Judge Riley said there was a need to impose penalties that would deter the couple and other employers from similar future conduct and accepted the FWO’s submission that negative publicity is one of the inevitable consequences of wrongdoing.

The company that directly employed the underpaid workers, Loelal Pty Ltd, was placed into liquidation in 2022. Ms and Mr Melotte were both sole directors of Loelal at different times.

Ms and Mr Melotte now operate Hotel Frangos and Café Koukla through another corporate entity, of which Ms Melotte is a director.

The Fair Work Ombudsman filed 146 litigations against employers involving visa holder workers, and secured nearly $23 million in penalties in cases that have included visa holder workers, in the seven financial years to June 2024.

The FWO has resources for visa holders, who have the same workplace rights as all other workers. The Australian Government has introduced the Strengthening Reporting Protections Pilot and Workplace Justice Visa Pilot to strengthen protections for eligible visa holders experiencing workplace exploitation.

Employers and employees can visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94 for free advice and assistance. An interpreter service is available on 13 14 50.

The FWO also has an online anonymous report tool, including options to report in languages other than English. Employees can also seek information from their employer or their union, if they are a union member.

Small businesses can find targeted resources at the Small Business Showcase and information is available for employees and employers at our hospitality award, young workers, and junior workers webpages.