The former chief executive of the Melbourne Demons has claimed he was dismissed after raising concerns about widespread underpayment of administrative staff and complaining about the club’s use of a consultancy firm linked to former premier Daniel Andrews.
The allegations are made in Federal Court documents filed by Paul Guerra, who was abruptly sacked by the Demons’ board in April after just seven months in the role, which had included an annual salary of $757,000 and bonuses.
The claims of wage theft at the Demons could have broader implications for several other AFL clubs, after Guerra raised the matter with the chief people officer at the AFL, Sarah Fair, according to the statement of claim lodged last week.
Melbourne Football Club has not yet had an opportunity to file a defence to Guerra’s statement of claim and his claims have not yet been tested in court. The Age is not suggesting Guerra’s allegations are true, only that they have been made in a court document.
“Ms Fair said that the AFL knows there is a problem across the AFL of clubs applying incorrect awards and the engagement of contractors who may have been employees, and that other clubs were also looking into this issue,” according to court documents.
Within weeks of starting as chief executive, Guerra claims, he was told by general manager of partnerships Donna Kennett that her staff were also required to work on match days and were not compensated.
“Ms Kennett told Mr Guerra words to the effect that this issue had been raised at the club in the past and had always been ‘shut down’,” according to the statement of claim.
Guerra had then taken up the matter with human resources general manager Jess Vandelaak and then chief commercial officer Chris Kearon, who he claims both conceded it was an issue the club had ignored.
Vandelaak also allegedly told Guerra that the club’s administrative staff, who include the executive and events teams, marketing, partnerships, retail and media, were all covered under the same award.
“Guerra became concerned that there was potentially a widespread underpayment problem at the club, specifically that there may have been other modern awards that applied to some administrative staff at the club,” it is alleged in court documents obtained by this masthead.
In February, Guerra appointed Sara Marriott as the club’s new chief people officer and requested she conduct a review to ensure all staff were classified under the correct award and paid their proper entitlements.
However, Guerra claims his concerns were dismissed by several board members, who had insisted all staff payments had recently been found compliant by consultancy giant EY.
Guerra claims on April 20 – about a week before he was sacked – he presented to the board the findings of Marriott’s review, which included the underpayment of six employees, while seven employees had been classified under the wrong award, and other roles needed to be urgently assessed.
“One of the employees who had been underpaid was a person with a disability, this underpayment went back over 10 years, and back-paying this employee may cause complications in relation to Commonwealth government payments that had been made to him,” the court documents state.
The AFL engages a law firm that clubs can use for advice on awards and payment compliance, but compliance with awards is a matter for individual clubs.
Guerra, who is a director at Racing Victoria, had also raised probity concerns about the board’s engagement of consultancy firm FMRS Advisory to assist with a plan to establish new headquarters at Caulfield Racecourse – in partnership with the Melbourne Racing Club.
FMRS Advisory was founded by several former senior staffers under the Andrews government including Ben Foster, Jessie McCrone, Adam Sims and Lissie Ratcliff. Under its deal with the Demons, FMRS Advisory received its instructions and payment from the board of directors, rather than the chief executive.
Guerra’s court document alleges that he complained about the arrangement with then president Brad Green.
“Guerra said he was uncomfortable with the fact that the board had engaged, and was directing, a contractor without his knowledge, control or visibility, in circumstances where Guerra was responsible for the club’s financial performance,” according to court documents.
“Green said, in a dismissive tone, that Mr Guerra was not involved in the move to Caulfield Racecourse and therefore Mr Guerra did not need to be across it,” the documents state.
FMRS declined to comment when contacted by The Age.
According to the statement of claim, Guerra was sacked at a meeting on April 28, which lasted about five minutes. He was told that the board had lost confidence in his ability to lead the club.
The Federal Court action launched by Guerra names the club and Demons president Steven Smith as respondents, and follows other legal claims against the Demons made in the same court by retired premiership defender Steven May and his partner Sachi Dade.
Guerra’s lawyer, Alex Wolff from Baker McKenzie, states his client’s reports to the board about alleged underpayment of staff and the arrangement with FMRS Advisory fell under “his fundamental duties as chief executive, and were all critical and necessary to meet his obligations under the [employment] contract.”
It is claimed in court documents that Guerra was entitled to protection under the Corporations Act and the Fair Work Act.
Guerra, who declined to comment when contacted by this masthead on Sunday, is seeking more than $1 million in compensation from the club.
A source with knowledge of the former Melbourne CEO’s interaction with the AFL, who declined to speak on the record while the matter was before the courts, told The Age the AFL had a different view on discussions involving Guerra.
They said no specific concerns were raised by Guerra about examples of underpayment at Melbourne or other clubs.
The source said Guerra’s first meeting with the AFL in October-November was a general induction meeting for a new club CEO, and the second meeting was a meet and greet with the head of HR.
The AFL declined to comment. A spokesman for the Melbourne Football Club also declined to comment.
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