Justin Hemmes owns and operates the billion-dollar Merivale Group. Photo / News Corp Australia
Billion-dollar hospitality empire Merivale, run by Sydney pub tsar Justin Hemmes, is facing an explosive court claim that alleges "systemic" wage theft to the tune of A$126 million.
Employment law firm Adero is bringing an open class action on behalf of an estimated 8000 former and current employees of the mega company, with 235 already registered, claiming they were regularly overworked and significantly underpaid.
Merivale is run by Hemmes, who is famous throughout Sydney's social set, and operates about 70 venues spanning pubs, clubs, restaurants and function spaces.
The landmark case involves two allegations – the first being that salaried employees, mostly chefs and managers, were paid for a contracted 38 hours per week but rostered to work an average of 55 hours, and often more, without any additional pay.
On that element of the claim, Adero litigation coordinator Nicholas Dwyer told news.com.au it was a strong case, with documentation allegedly illustrating the extent of unpaid work carried out.
But the second and most significant part of the class action relates to Merivale's employment agreement covering every worker, permanent and casual, which Adero argues was invalid for a decade from 2009 onwards.
"If the court agrees with our argument that the agreement shouldn't have been used, then all Merivale hospitality workers since 2014 will be entitled to compensation," Driver said.
Adero calculated that number could be as high as 8000 workers over a six-year period – the maximum claimable period under the Fair Work Act – with each entitled to between A$3400 and A$10,900 per annum, excluding any penalties that might be imposed by the court, Driver said.
A Merivale spokesperson has slammed the class action, describing it as baseless.
On the eve of the first hearing in the Federal Court, news.com.au has exclusively obtained copies of a cache of documents, from rosters allegedly showing 16-hour workdays to internal time cards tracking the number of unpaid hours worked.
Pay slips corresponding to those rosters allegedly show staff were only paid for 38 hours of work, receiving no overtime.
Of the current and former staff that news.com.au has spoken to, it is alleged that they did not receive overtime when their work week exceeded 38 hours.
It's understood that a small number of Merivale venues pay overtime when a chef has worked above 55 hours a week "as a custom", but the arrangement is not in writing.
The industry award stipulates that overtime should be paid above 38 hours.
With chefs working an average of 55 hours per week, Merivale essentially got at least 17 hours of free labour weekly per person, Adero alleges.
Workers have told of the toll working unreasonably long hours took on their lives, with one saying he "felt like a slave".
"I used to work for them with my ex-wife – we broke up because of them," one chef claimed.
"We used to work 11 to 13 hours per day with only a 30-minute break. My ex-wife decided to leave the country … they literally destroyed my life."
Another chef became so physically unwell from the long hours that his doctor ordered him to stop working, it's alleged.
An employee with Merivale's functions division said it was not uncommon to work 60- to 70-hour weeks in peak periods.
"It was not unusual during events season to be required to (work) multiple events in a day," the worker said. "Between set-up, running the event and then packing down, I might begin work at 7am or 8am, and not (finish) until 3am, 4am or even 5am the next morning."
A Merivale spokesperson strongly denied all allegations of mistreatment and said the company "regularly reviews its compliance regarding employee entitlements".
"Merivale has always acted with the interests of its workforce squarely in mind and does not anticipate that its employees will in any way benefit from these proceedings," the spokesperson said.
"Nevertheless, if necessary, Merivale will vigorously defend any claim."
Adero believes 80 to 90 per cent of Merivale's chefs were permanent employees paid a salary and contracted for 38 hours per week but required to work at least 50 to 55 hours on average.
Work above that level wasn't unusual, with some of the claimants alleging instances of 100-hour work weeks.
"It's a punishing schedule," Driver said.
Rosters for two iconic Merivale venues – Coogee Pavilion in the city's east and French restaurant Felix in the CBD – show chefs being required to work 16- to 18-hour days, multiple times a week.
Statements from kitchen staff include a number of allegations of unreasonable conditions, from not receiving breaks to foreign workers having their visa sponsorship threatened if they complained.
"Reasonable overtime might be when the oven is broken down and you wait back a few hours for the repairman, or ad hoc things like that," Driver said.
"Reasonable overtime is not working a whole extra shift done for free, systematically."
The case is the latest allegation of underpayment levelled at a hospitality group, which has seen a string of prominent businesses facing investigation, from Rockpool – for which Neil Perry remains as brand ambassador – and Shannon Bennett's Vue Group.
The Merivale class action comes in the wake of the collapse of Made Establishment, the business of fallen celebrity chef George Calombaris, which never recovered from its wage theft controversy.
But the amount Adero alleges is owed to Merivale staff – at least A$74 million – significantly dwarfs the A$7.8 million Calombaris was ordered to repay.
The Merivale spokesperson attacked Adero and accused it of running "a sensationalised campaign via the media".
Driver said the firm had conducted 12 months of due diligence before filing its claim late last year and was so confident it was working on it on a no-win, no-fee basis.
Up until early 2019, all Merivale staff were employed under a Work Choices-era agreement from 2007 that set standard rates of pay and other entitlements.
In January last year, the Fair Work Commission ordered the so-called "zombie agreement" cease and that Merivale pay its workforce as per the standard industry award.
"We argue that the 2007 agreement was terminated in 2009, therefore it never actually operated (lawfully)," Driver said.
"And consequently, all Merivale employees who have received low, flat rates of pay across evenings, weekends and public holidays would be entitled to the benefits of all those loadings and penalties for every single shift worked between 2014 to 2019."
In 2009, the Workplace Authority, which was superseded by Fair Work, wrote to Merivale to terminate its employment agreement because it "did not pass the Fairness Test".
"The agreement stops operating from the date of this notice (unless it was terminated or replaced before that)," the January 30, 2009, letter, obtained by news.com.au, read.
Merivale engaged an employment law firm and a stoush began, until eventually the Workplace Authority relented and withdrew its cancellation.
But Driver said Adero had engaged two independent senior counsel barristers to examine the circumstances of their argument, and they will argue that the arrangement wasn't lawful.
"Once that agreement ended, it shouldn't have been used," Driver said. "It's quite a technical legal point but we're confident – staff should've been paid under the award."
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