Hospitality king faces $25m lawsuit for underpayment of workers

Justin Hemmes’ billion-dollar Merivale hospitality empire is facing a potential class action over claims it underpaid workers for years in breach of workplace laws.

Last week, the Fair Work Commission ruled that the company must start paying its 3000-strong workforce under the current hospitality award from March.

It terminated Merivale’s long-expired 2007 Employee Collective Agreement that meant it was not required to pay almost 3,000 staff overtime or full penalty rates for nearly a decade. The employee agreement expired on 21 December 2012.

For around 12 years, the Merivale Group – which owns and operates more than 70 venues across Sydney including the Coogee Pavilion and The Ivy – has operated a Work Choices-era agreement with lower than current award rates of pay and almost non-existent penalty rates for weekends and public holidays.

The agreement will now be phased out, despite Merivale’s claims that paying its staff under the current award could impact the viability of the group’s operations.

Law firm Adero has confirmed it is investigating legal action against Merivale after alleging the company misclassified workers and failed to pay them the legal hourly rate even under its long-expired Work Choices enterprise agreement.

Lawyers are reportedly seeking redress of up to $25 million for underpayments, along with financial damages claims for up to $728,000. A potential lawsuit would raise complex legal issues over rates owed in expired agreements made before the Fair Work Act.

The Fair Work Commission decision followed a campaign by the United Voice union, which said some staff had been paid up to 20 percent less than they should have been.

Merivale’s resources manager Kate Tones sparked a media backlash when she wrote in a submission to the commission: “Merivale will need to consider the viability of business practices which while viable under the (enterprise bargaining agreement), may not be viable under the modern award.”

Justin Hemmes, head of the billion-dollar hospitality empire, has an estimated personal net fortune of $300 million.

Merivale’s highly-anticipated annual staff party, due to be held next month, was cancelled on Monday following the Fair Work Commission ruling.

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