The collapse of George Calombaris' hospitality empire should be a warning to all, writes William Olson.
A TIME-HONOURED expression exists in the world of hospitality management: “the left hand has to know what the right hand is doing.” Basically, it means that the person in charge has a duty of care to know all aspects of how a function, event, or a business such as a restaurant, café, bar, pub, or club is being run and how to correct it if things go wrong.
Inevitably, disgraced celebrity chef George Calombaris had no choice but to pull the pin on his company and its restaurant holdings last week. While the timing of these actions still packs a degree of suspicion with it, the former MasterChef judge and those who defend his business actions and his decisions within it still lay the blame for Calombaris’ demise at a catalogue of different sources.
Except at the hands of Calombaris himself, which is where the blame should lie.
As such, Calombaris failed in his "duty of care" to know whether or not his staff across his MADE Establishment network of restaurants and eateries around Melbourne – 22 of them, within 12 distinct companies – were being paid their proper wages, superannuation and entitlements. And by the time he found out that many of them weren’t, and the resulting degree of morale that was lost within his business empire, the damage to his business was irreparable and he could not salvage its skin.
Given that a human cost exists in the aftermath of Calombaris’s decision, spare some thoughts for the 500 or so employees within the MADE Establishment network who will be out of a job.
And these people – representative of the decent, hard-working and passionate forces of labour within the hospitality industry – are the victims of Calombaris’s actions. Or inactions, whatever side one opts to take.
Apparently, either Calombaris or his business associates, or both, were well aware of the wage theft actions from as far back as 2012. And by all accounts, some of his current or former employees at Hellenic Republic – let alone those at The Press Club, or other Melbourne fixtures such as Gazi, Jimmy Grants – have recently been reimbursed their stolen wages, some after years and years of struggling to get what they were rightfully owed.
All in all, the bill totalled $7.8 million for the MADE Establishment chain, even after Calombaris was forced to pay a fine – a glorified “contrition payment” – of $200,000 to the Fair Work Ombudsman, after which he promised to reimburse present and past employees what he had owed them over the previous seven years.
Even Attorney-General Christian Porter – who, in his dual role as Minister for Industrial Relations within the Morrison Government – said that the fine was quite light, even as soft as melting butter. Porter has since promised that at the federal level, anti-wage theft legislation would be introduced before the Parliament prior to next May’s federal budget.
Likewise, closer to home for Calombaris, Victorian Premier Daniel Andrews declared the practice of wage theft should be a prosecutable and criminal offence as a central promise during his re-election bid in 2018. Such legislation currently pending on Spring Street.
Whether Calombaris’s discontinuing trading within his chain of restaurants exists as an attempt to avoid such prosecution – which in the case of the Victorian legislative proposal, could carry heavy fines and jail terms of up to ten years – remains as a highly-charged two-way debate.
Meanwhile, as Calombaris posted a lengthy statement and apology over the closure of his restaurants on his personal Instagram account, his defenders began putting forth the blame, excuses as varied as the numbers of Calombaris’s closed restaurants themselves.
Administrators KordaMentha – recovery specialists that Calombaris surrendered his businesses to – have pinned the blame on factors such as increased operational costs, competition from gig economy-based delivery companies such as UberEats, MenuLog or Deliveroo, and consumers preferring more mid-tier dining options. These same administrators also believe that a quick sale of Calombaris’s restaurants is still likely and have stated that deals to achieve those sales can be done as soon as possible.
And then come the absurd notions. Restaurant and Catering Industry of Australia (RCIA) chairman Wes Lambert has alleged that the FWO was chiefly responsible for bringing about Calombaris’s downfall with a “heavy-handed” approach which included “naming and shaming” offenders to their investigations and punishments, in spite of Porter’s past analysis on the fines themselves.
Lambert also went on to cite “a perfect storm” of the summer’s bushfires and coronavirus outbreak coinciding with rising operational restaurant costs that drove customers away from Calombaris’s restaurants.
The outright strategy being deployed by Calombaris’s defenders is to attack the system within the hospitality industry, if not the Restaurant Industry Award 2010 and the body which governs all workplace awards, the Fair Work system. They cannot fathom that seven years of wage theft actions could possibly be Calombaris’s fault.
However, upon making that contrition payment, even as paltry as it was, to the FWO last August, Calombaris confessed that the underpayments of wages and entitlements to his employees was his fault, no matter how tardy he was in making them – or even being awoken by the long-term consequences of those inactions.
And while Calombaris has yet to reiterate that sense of personal responsibility and “mea culpa” since last Monday, at least he’s taken that tact in the past – albeit after much scrutiny in the court of public opinion and pressure from the unions on top of it. The same cannot be said of the finger-pointing being committed by his handlers and defenders.
Of course, none of this will sit well with Calombaris’s employees who are now out of a job. Fault, blame, or reason doesn’t change their unemployment or underemployment status, provided that they have second jobs to fall back on as many hospitality workers do.
And the allegation of these employees finding out about losing their jobs via Calombaris’s Instagram post – not by other less impersonal methods as a text message, group e-mail, Facebook Messenger group chat, or even brief telephone calls from their managers – might rank right alongside of being financially shortchanged as the biggest insult of all.
These people deserve more than that.
Calombaris has become the poster boy of the wage theft epidemic and rightfully so. It's an epidemic that has enveloped countless other hospitality business owners and operators, from celebrity chefs to lesser-known fly-by-night managers of neighbourhood establishments alike. But the common denominator has become a well-worn path: follow the awards and entitlements, because it is the law. If you can’t, the FWO can help you do it.
While anti-wage theft legislation remains in the developmental stages, at state and federal levels, the bottom line remains: there are no excuses for not being able to follow the Fair Work Act and the law on paying wages and entitlements, no matter who you are.
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