Bakers Delight Holdings, Make Dough Enterprises Pty Ltd, John Puglisi, Lisa Kay Puglisi pursued by Fair Work Ombudsman

Legal action has been launched against the franchisor and franchisee of three Hobart bakeries, operated by a local couple accused of underpaying more than 100 young staff $1.25m. Details >

The Fair Work Ombudsman has commenced legal action against Bakers Delight Holdings,

Legal action has been launched against the franchisor and franchisee of three Hobart bakeries, operated by a local couple accused of underpaying more than 100 young staff $1.25m.

The Fair Work Ombudsman alleges that 142 mostly young staff, as young as 14, at Bakers Delight outlets in Kingston, Lindisfarne, and Eastlands were underpaid $1.25m between July 2017 and October 2020.

The FWO investigated the Kingston, Eastlands and Lindisfarne Bakers Delight outlets in response to intelligence gathered about potential noncompliance at the stores.

There, inspectors allegedly discovered staff were underpaid entitlements including minimum wages, weekend and public holiday penalty rates, overtime rates, leave entitlements and minimum shift pay, and had money unlawfully deducted from their termination pay.

Legal action in the Federal Court will now be taken by the FWO against Bakers Delight Holdings Pty Ltd, the franchisor of the Bakers Delight chain in Australia – in relation to a portion of the alleged underpayments.

A Bakers Delight store. Picture: NCA NewsWire / Gaye Gerard

It is alleged that Bakers Delight Holdings is liable for $642,162 in underpayments at three stores after February 2019, because it became aware the franchisee operating the stores had been underpaying staff but failed to take preventive action.

The franchisee is alleged to have either known or should have reasonably known further underpayments would occur.

The FWO is also taking legal action against the couple who owned and managed the operations of the stores, John Vince Puglisi and Lisa Kay Puglisi – as well as the couple’s company Make Dough Enterprises Pty Ltd.

The company was the franchisee of the three stores and allegedly directly employed and underpaid the affected workers.

It was also placed into liquidation earlier this year, when the three stores were closed.

It is alleged the primary causes of the underpayments were Make Dough Enterprises, Mr Puglisi and Ms Puglisi failing to pay overtime rates listed in a 2012 Enterprise Agreement, and continuing to pay staff minimum rates listed in the agreement rather than increasing pay rates annually to be at least equivalent to minimum rates listed in the General Retail Industry Award.

It is further alleged that underpayments, including $106,281 to a young apprentice baker, remain outstanding.

It is also alleged Bakers Delight Holdings either knew or should have also reasonably known the workers at the three stores would be underpaid because of an audit the franchisor commissioned in 2019 identified underpayments and other noncompliance issues at the stores.

But it is alleged that once the audit findings were provided by Bakers Delight Holdings to Make Dough Enterprises, Mr Puglisi and Ms Puglisi in February 2019, no action was taken to address the noncompliance and the alleged underpayments persisted.

Staff working at an unrelated Bakers Delight store.

It is alleged Make Dough Enterprises, Mr Puglisi and Ms Puglisi allegedly also committed a range of other contraventions of the Fair Work Act, including Make Dough Enterprises and Ms Puglisi allegedly providing false records to the Fair Work Ombudsman and all three allegedly failing to comply with notices to produce documents.

Acting Fair Work Ombudsman Kristen Hannah said franchisors could be held accountable if they failed to take action to prevent breaches in their networks.

“In this case, we allege Bakers Delight Holdings was aware many young workers at these three Hobart stores had been underpaid but failed to take reasonable steps to prevent further underpayments occurring,” Ms Hannah said.

Bakers Delight Holdings faces penalties of up to $66,660 per contravention; Make Dough Enterprises faces penalties up to $66,660 per contravention or $660,000 per serious contravention; and Mr and Ms Puglisi face penalties of up to $13,320 per contravention or $133,200 per serious contravention.

The Fair Work Ombudsman is also seeking court orders requiring Bakers Delight Holdings, Make Dough Enterprises, Mr Puglisi and Ms Puglisi to rectify the underpayments, plus interest and superannuation.

The matter has been listed for case management hearing in the Federal Court in Hobart on July 26.

A request for comment was sought by the Mercury.