Global ethical dilemma- Wage theft case study

Executive summary 

Wage theft is an unlawful act by a corporation or by managers to deny or fail to pay compensation as well as employee benefits. George Calombari's restaurants are among the main convenient and hospitality empires in Australia, although the company have been accused of underpayment scandal. The Fair Work Ombudsman's four-year report found a number of irregularities, such as a refusal to pay minimum reward payments, minimum wages, routine workloads, overtime pay, split-shift provisions and annual leave loadings. This assessment deals with the case analysis recognising the ethical theories and dilemmas followed by recommendations for both organizations and hotel managers. 

Case introduction

The George Colambari's Case  

The George Colambari's Case has gained a lot of attention due to the unethical and illegal conduct of underpayment of the employee. This case signifies the unethical practice of overwork and underpayment. The Press Association, Hellenic Republic and Gazi were included in the Melbourne-based restaurants empire, established by Calombaris. Before the national election since May, the matter of structural underpayment gained traction after outgoing Progressive Industrial Affairs Minister Kelly O'Dwyer reached an agreement to a new study by former consumer watchdog leader Allan Fels urging criminalization of wage theft.

From April 2017, when the restaurant empire Made Establishment revealed that 163 employees had also been underpaid $2.6 million due to "historically bad procedures," the full scope of the underpayment crisis overshadowed initial reports by Calombaris. The Fair Work Ombudsman's four-year report found a number of irregularities, such as a refusal to pay minimum reward payments, minimum wages, routine workloads, overtime pay, split-shift provisions and annual leave loadings. It was suggested that wage theft and worker coercion was a means for all branches and particularly for the parent organization to hold store prices down and raise profits. Made Administration has also refused to report annualised wages for the hours served by workers, many of who have also been declined accrued overtime and holiday pay. Famous chef George Calombaris has been charged with a significant fine, since agreeing to underpay $7.83 million in compensation to 515 active and retired staff of his hospitality enterprise as part of an extraordinary settlement with the Fair Work Ombudsman. As per the enforceable undertaking, the MasterChef celebrity was being required to make a $200,000 "contrition bill" and must therefore make a number of public statements to support conformity with the Fair Job Act.

Fair Work inspectors have discovered that some workers in the Jimmy Grants network, that includes some owners and shareholders with MAdE, had skipped welfare payments. 

At the restaurants, the inspectors found "major billing errors" because annualised wage plans were not adequately extended to certain workers, and they lost out on compensation and penalty costs. The contract with the Fair Work Ombudsman would enable Calombaris to introduce new compensation and inspection processes through his range of restaurants which include Gazi, Hellenic Republic and Jimmy Grants. For the next four years, every venue should also be individually audited, while instruction in industrial relations would be given to all Rendered Establishment workers in charge of human resources, accounting and on-site management. In a report, Fair Work Ombudsman confirmed that the organisation dedicated MAdE Establishment to rigorous stages to ensure that current and potential staff is adequately compensated through their restaurant division. The huge back-payment bill by MAdE must act as a notice to all workers that they will spend months fixing the mess if they do not get workforce enforcement from the very first day.

Case analysis 

Ethics 

Wage theft is an unlawful act by a corporation or by managers to deny or fail to pay compensation as well as employment benefits (Clibborn and Wright 2018). Often, within various companies, there is a refusal to compensate for overtime work and fraudulent deductions in compensation salaries. In addition, the infringement of basic wage regulations and the cutting off of workers' valid leaves without any other compensation are both known as wage theft. This case study shows many evident ethical issues and dilemmas as wage theft affects the majority of the employees who earn for daily livelihood. It has a negative impact on the workers trust in the organization and adversely affects work productivity (Clibborn and Wright 2018). 

Turyakira 2018 suggest that corporate enterprises' desire to engage in ethically appropriate activities plays a significant role in strengthening a company's values. Businesses, like hospitality, hotels, still play a major role in society’s growth. In the psychological, political and economic facets of society, enterprises have a major role to play. A company's acts are expected to impact society in one direction or another. Firms are so influential in the lives of individuals that it is possible for corporations to dictate even the actions of companies on government structure and policy decisions. The stakeholders in this case study issue are the many people who were cut short of money when constantly working for George Calombari's hospital empire every day. This even concerns the company's potential owners, as this concern would prevent individuals from continuing to work at George Calombari's restaurant or simply becoming a store client. 

As the corporate image and the stock value came down, the owner of this company were deeply impacted by this incident. Both the families who lose half of their income tried to make out of food and pay the bills as they were expected to earn twice as much compensation for their employment. This massive controversy made it very difficult for the organisation to be answerable to the investigation. Since the wage settlements and cash paybacks, the staff could have left the company to find new occupations. This left wide open numerous job opportunities with the main player in their respective sector. Nevertheless, given the controversy and the enormous fact that they had been back under inquiry just one month after this whole controversy erupted, the opening was very difficult to fill. 

Individualism is all about maximising corporate holders' income without breaching the rule (Heino 2017). In this example of George Calombari's restaurants case, they completely maximised profits by paying less money to their staff, but this was only done in some cases by breaching the rule. They were committing institutionalised bribery and labour coercion on their hard-working employees, in addition to trying to cut the overtime wages of the workforce. While this maximised their income and left business owner and higher holders very satisfied, the company's second-tier, lower class, frontline line employees were economically exploited, which is against law, of necessity (Levin 2020).  

It has been found that Business activities should be directed at optimising long-term satisfaction for all sentient beings impacted by business activities per Utilitarianism (Hooker 2018). In this case George Calombari's restaurants case, they went against the principles of utilitarianism and maximised the satisfaction of only senior management and shareholders. There's no possibility that the workers who got less income with which they served were satisfied. They avoided being caught and penalised and potentially losing their work by only making top management owners happy. It is apparent that revenue was much more essential to them than the long-term maximisation of satisfaction for all sentient beings influenced by company behaviour. The foundations of corporate ethics are laid around the premise that it is likely that these actions can have detrimental impacts on societies and people when corporations are involved in unethical acts (Hooker 2018). In certain situations, as corporate executives behave poorly, it is likely that not only the internal stakeholders of firms but also the external parties can be impacted by the consequences of those actions (Harkins 2020). It is valid, for instance, that when a corporation is embroiled in acts of wrongdoing, the company's ethos and ideals are probably to be eroded. It is not only such internal principles that will be undermined; moreover, the conduct will also have detrimental consequences on the norms and traditions of society.

As per the Kantianism theory of ethics, always act in ways that respect people and the decisions and value them don't lie, steal, or exploit or hurt others (Moran 2017). "Instead, use the parties' knowledgeable and fair agreement". This is a Kantian's philosophy and it is clear that when the agreement to compensate less wages and salaries was made, this was not considered about at all. Owners did not value their workers when they did not pay for what they were worth.

Justice theory 

One of the core principles of universal moral philosophy is "justice", which has been considered since ancient times. Justice involves giving each individual what he or she needs. Justice, regardless of the community and environment in which people live, is fundamental (Rajendra 2017). Justice is only applicable where the sides act fairly-if either of the parties acts disproportionately, it results in unfair salaries. Inequality is also the basis for assessing income disparity because it is believed there is economic injustice when people who earn too little or discriminate against a community of workers. In that way, the law is necessary to provide the basis for a minimum wage to satisfy the basic needs of the worker. More recently, in regards to justice, rationality, decisions researchers quote that in a rational environment, the quality of wages, taking into account considerations such as production, demands, and investments that need to be made for the good of future generations. Specifically, the basic income is not an appropriate means of controlling wages in order to satisfy basic needs. In contrast to this, George Calombari's restaurants workers have not even got the basic wages and are even facing difficulties in order to meet their daily needs. 

Recommendations 

Connection to business ethics within the industry generally

Market focus and identification of wage theft risks- Related problems pertaining to wage theft may be established with the aid of thorough investigations between enterprises and organisations. In comparison, the coordination of the minimum wage law and the processes for working and paying should be achieved to reduce this risk. Focusing on the market can help to consider and minimise the challenges posed by workers.

Strict penalty issuing- It is possible to preserve market operations and cyclical cash flow with a stringent penal code for breaking wage theft laws for workers as well as enterprises.  In comparison, wage theft could also be alleviated by the government's regulations and penalties by ensuring ethical practice and social corporate responsibility (Tarkang et al. 2019). Initiatives should be undertaken by the companies and also by the government with the mutual coordination of the Labour Union and the Australian government in terms of developing greater awareness of wage theft methods and processes as well as to reduce the prevalence of breaches of laws. This would improve the awareness of query raising and hospitality monitoring structures and help to track the country's prevalence of wage theft.

To hotel managers, to improve their responsible and ethical leadership

Like all other corporate organisations, hotels are responsible for fostering ethical actions, both for their sake and for the sake of their clients. In the formation and advancement of ethical actions, one of the most significant tasks of hotel management is to establish, cultivate and improve healthy cultural and ethical practices in hotels. The initiation of ethical conduct in hotels begins with the establishment of a culture of ethical conduct. 

Ethical decision making by managers- Another way in which hotel managers adhere to organisations' ethical actions is to ensure that they are participating in ethical decision-making. One of the most critical tasks for corporations is decision-making. It is the responsibility of manager leaders to make decisions that they feel would make meaningful contributions to the organisation's growth. The choices that management makes can determine the path and company goes in its effort to accomplish its goal. In the decision-making process, one of the challenges leaders ought to take care of is to consider the significance of the existing problems encountered in the industry (Dhar 2016). Hotels are constantly facing incredibly complicated problems as days go on, which they need to take into account in their decision-making processes such as the critical issues of wage thefts.

Development of internal standards and policies- In establishing organisational procedures and practises that define and justify the behaviour of personnel, managers play an important role. Because all workers have distinct traits and attitudes, it is important to remember that companies are likely to collapse into turmoil as they are left to act in a way that is compatible with their needs, expectations and interests (Naiyananont and Smuthranond 2017). Therefore, it is possible that the establishment of standards of ethics that are following the organisations' ethical values would play an important role in improving corporations' ability to implement prudent practices (Naiyananont and Smuthranond 2017).