Naming and shaming by the workplace watchdog, rising costs, bushfires and coronavirus are being blamed for the MAdE empire falling into voluntary administration.

February 11, 2020 12:00:54
The collapse of George Calombaris’s restaurant group was in part due to the “heavy-handed enforcement” of pay rates and entitlements by the Fair Work Ombudsman, the head of Australia’s restaurant industry body says.
Key points:

  • MAdE last year back paid $7.8 million to 515 current or former employees at its Press Club, Gazi and three Hellenic Republic restaurants and Jimmy Grants paid a further $16,371 to nine employees
  • Restaurant and Catering Industry Association CEO Wes Lambert said the Fair Work Ombudsman named and shamed businesses that self-reported underpaying workers
  • A restaurant critic with The Australian newspaper said Mr Calombaris had become “a bit of a fall guy” for MAdE’s woes

Almost all of the venues in the MAdE Establishment Group are to cease trading immediately, after KordaMentha was yesterday appointed the voluntary administrators of the 22 companies founded by Mr Calombaris.
It comes just months after the celebrity chef’s hospitality empire back paid $7.8 million in wages and superannuation after admitting to underpaying more than 500 current and former employees. It was also fined $200,000 by the Fair Work Ombudsman.
The staff were underpaid for work between 2011 and 2017.
The 12 restaurants and eateries to close their doors immediately include five fine-dining restaurants and seven Jimmy Grants souvlaki outlets. More than 400 employees will be affected.
But Restaurant and Catering Industry Association chief executive Wes Lambert said the “heavy-handed enforcement” of the Fair Work Ombudsman “naming and shaming” businesses that self-reported wage theft was partly to blame for the collapse of the empire.
“We would say that the negative publicity due to his [the ombudsman’s] naming and shaming certainly affected his [Mr Calombaris’s] business on top of the perfect storm of bushfires, coronavirus and the overall cost of doing business increasing, year over year,” Mr Lambert said.
He said the Fair Work Commission was expected to announce another increase to the minimum wage and award rate soon.
“This is just going to add increased pressure to an industry that is already doing it tough based upon outside forces,” he said.
In a statement, a spokeswoman for the ombudsman said a range of factors were considered when determining an appropriate regulatory response to wage theft.
“Such as the scale of workplace law contraventions and deterring others from engaging in unlawful behaviour,” she said.
“It is standard practice for the Fair Work Ombudsman to announce formal enforcement outcomes such as court-enforceable undertakings.”
Mr Lambert also said the hospitality industry was facing a “perfect storm” of rising costs, bushfires and the coronavirus outbreak.
Mr Lambert said costs in the restaurant industry had been skyrocketing. Wages, food and beverages and rents are up between 30 and 65 per cent. Electricity prices have also increased by up to 150 per cent.
Calombaris should ‘liquidate his own personal holdings’
Jo-anne Schofield, the national president of the United Workers Union, said it was devastating for the workers, and the union would support its members to ensure their entitlements, outstanding wages, annual leave and superannuation were paid.
The union said an unnamed worker was angry because although their wages had been paid, annual leave had not.
Victorian Trades Hall Council secretary Luke Hilikari said the collapse was another blow to staff who had been underpaid by the company.
“First Calombaris rips off workers and owes them $7.8 million in wages and now they face losing their jobs,” he said.
“No worker should lose a job or a dollar while Calombaris is still cashed up.
“If a worker is left unpaid he [Mr Calombaris] needs to liquidate his own personal holdings to make sure that those workers get everything they are entitled to.”
Mr Hilikari also called on the company to ensure all workers were paid their full wages and entitlements.
He said it would have the greatest impact on temporary visa holders and those in insecure work.
Calombaris too busy to know about staff underpaid, critic says
Lethlean, a restaurant critic with The Australian newspaper, said he believed Mr Calombaris’s downfall was not purely because of the staff-underpayment saga.
“The easy way of looking at this is that people just decided not to visit Calombaris-related restaurants anymore. I personally suspect it’s a lot more complicated than that,” Lethlean told ABC Melbourne.
“Falling numbers have contributed, maybe even been the straw that broke the camel’s back.
“I imagine a whole lot of other things are going on in the background that have brought it to a tipping point.”
Lethlean, who first met Mr Calombaris when the chef was an apprentice, said the former Masterchef host had become “a bit of a fall guy” for MAde’s woes.
“I think he’s one part of a bigger problem,” he said.
“I’m reliably informed that George owns less than 20 per cent of the company. He has business partners behind the scenes whose names haven’t really been discussed a great deal.”
Lethlean said he did not believe Mr Calombaris could have known about the full scale of his company’s underpayments because of his busy schedule.
Mr Calombaris said in a post on Instagram the decision was made with “deep sadness and regret”.
KordaMentha said administrators would look for new operators for the venues and would meet again on February 20.
The Fair Work Ombudsman was approached for comment.
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