Coffee chain accused of refusing holiday pay

Youth Community Union says 81% of cafes nationwide pay no allowances


A former part-time coffee shop worker filed a complaint with the Ministry of Employment and Labor on Wednesday that the nation’s largest coffee shop franchise, Caffe Bene, had refused to pay him and his coworkers with weekly holiday allowances.

If accepted, the complaint is expected to pave way for tens of thousands of youths working at coffee shops nationwide to receive about 20 billion won ($18.5 million) in missed payments.

According to Youth Community Union, the complaint was filed against Kim Sun-kwon, CEO of Caffe Bene, by a part-timer who had worked for one of the branches for three months and hadn’t been paid with the weekly holiday allowances.

Under the Labor Standards Act, weekly holiday allowance should be given to an employee who fulfills his or her weekly contractual working hours.

The purpose of the system is to reduce the fatigue of workers, protect their health and to provide time to participate in social and cultural activities, it said.

If a daily worker works for six consecutive days per week, actual working days, not contractual working days, must be applied and weekly holiday must be granted. The employer must pay weekly holiday allowances separate from wages for daily workers, unless the affected worker agrees to receive the weekly holiday allowance in advance with their daily wages. The system is adapted to all workplaces hiring any staff working for more than 15 hours a week.

The Youth Union revealed that out of 220 large coffee shops surveyed nationwide, 81.2 percent haven’t paid their workers the allowances. Those studied were Caffe Bene, Angel-in-us, Coffee Bean, Hollys, Pascucci, Starbucks, and Tom&Toms. They are believed to have neglected to pay more than 19.7 billion won in allowances of the kind over the past three years.

The researchers said the outcome was especially shocking as some “global standardized” franchises were listed on top. Coffee Bean, the U.S.-based franchise, has paid none while Starbucks, one of the largest in the world, is suspected to have had contracts with its part timers based on 15 hour-a week system to evade the allowance payment. “But in reality, many of the workers work for more than 15 hours a week,” the union said.

These companies have refused to pay their allowances and the youth union had to take legal steps to set things straight, they said.

“Coffee shop franchises have become one of the most popular ways for large or global companies to penetrate local retail markets. Angel-in-us is run by Lotte while Starbucks is co-owned by Shinsegae and Pascucci is run by SPC. However, these companies have refused to pay the money,” said Kim Young-kyung, head of the union.

“They put fair trade as a marketing tool but are not being fair in their staff welfare and legal responsibilities. We will seek to file lawsuits against the heads of the franchises if they show no sign of improving,” she added.

On Wednesday, Caffe Bene said it would pay all due weekly holiday allowances to all incumbent and former part time workers. “We regret the mishap and our financial department has already started calculating the figures,” a Caffe Bene spokeswoman told The Korea Herald without elaborating on the specific amount of money it owed.

By Bae Ji-sook (baejisook@heraldcorp.com)