George Calombaris’ restaurant empire has collapsed, is now in administration and his twelve restaurants are up for sale. Because of this collapse, about 400 staff are now out of work1. How could this happen to such a successful restaurateur? Well, it all started when it was reported that 200 staff at his restaurants had been underpaid $2.6 million. According to Calombaris, this was because of poor processes in classifying employees from around 2011. Calombaris’ company was initially alerted to the payroll problems by the Fair Work Ombudsman in 2015, but the issue was not investigated by the company until late 2016 when the new CEO, Troy McDonagh, contracted KPMG to sort out what had happened. While many staff were underpaid, especially overtime, nearly half of all staff were overpaid their base salary2.
When this came to light, Calombaris’ company was made to pay back current and former employees and under a court-enforceable undertaking with the Fair Work Ombudsman, was compelled to make a $200,000 ‘contrition payment’ (i.e. fine). Attorney General Christian Porter considered this to be too light a penalty given that the full extent of the underpayment was found to be $7.83 million. The Fair Work Ombudsman later agreed that the fine was probably too low. Calombaris was also dropped as one of the ‘judges’ on the MasterChef television show, along with other ‘judges’ Matt Preston and Gary Mehigan, ostensibly for asking for too big a slice of the revenue pie. However, it does make you wonder if that was the reason, as this happened after a petition with 25,000 signatures was raised calling for his sacking. Calombaris was subsequently given the chop as the face of a lucrative campaign with Tourism WA2,3,4.
Reaction by the public was particularly swift with patronage of 12 restaurants owned by Calombaris’ company dropping by 50% after the scandal became public. It was this drop in cash flow which led to Calombaris’ company going into receivership, as it owed the Commonwealth Bank, its chief lender, some $5-10 million1.
After the collapse of Calombaris’ empire, the blame game started. The first was the hospitality sector which blamed the Fair Work Ombudsman for their overzealous ‘name and shame’ campaign. They also argued that more jobs than just those from Calombaris’ restaurants could be at risk5. This indicates that they know of other instances of underpayment of staff. This drivel from the hospitality sector blaming the regulator is tantamount to abusing the police for the loss of income by armed robbers because of a sentence of incarceration handed out by the courts. Could it be, if Calombaris hadn’t underpaid his staff, his company would still be trading?
Second cab off the rank of blame, was Innes Willox, Chief Executive of the Australian Industry Group. He blamed the government and unions for a well-meaning but out of control campaign. He particularly aimed his rhetoric at the “unions, in particular, through relentlessly overinflating and politicising the issue and branding employers as ‘thieves’”, and stated that they “should bear much of the opprobrium for the sad outcome in the Calombaris case and others.” Ludicrously, he went further: “Anti-business rhetoric has reached fever pitch, risking jobs and investment and federal and state governments were supporting a divisive agenda by parroting overly emotive union terms such as ‘wage theft’.”5. These statements by Willox are even more bizarre. Given that unions represent workers, Willox is effectively blaming the people who were underpaid for the collapse of Calombaris’ empire. Given the recent lies blaming of the Greens and arsonists for the bushfires uttered by assorted members of the government and other right-wing nutters6, I am surprised Willox didn’t include the Greens and arsonists among those responsible for Calombaris’ demise. Despite this, his statement is just as stupid.