Businesses that employ shift workers — especially in food and retail — are facing increased litigation risk. In December 2025, Grill’d joined McDonald’s in defending class action litigation arising from alleged systematic failure to provide 10‑minute rest and drink breaks to casual employees. In February 2026, KFC substantially settled a class action with similar circumstances for $28.8 million, with 90,000 current and former KFC staff expected to be eligible for compensation. The KFC settlement is the first of its kind in rest break litigation and may foreshadow the outcome of the larger McDonald’s proceedings, in which approximately 300,000 employees are alleged to have been denied their entitled breaks.
The recent expansion to Grill’d means that other food and retail providers are now on notice that plaintiff firms and unions will be actively looking for their next focus in this space (using the arguments that have supported the proceedings filed to date).
What’s happened?
McDonald’s
A class action was commenced in the Federal Court in December 2021 against McDonald’s by employees who worked in McDonald’s corporate and licensed stores, with union support.
The essence of the claim is that eligible workers were not consistently given paid 10‑minute breaks during qualifying shifts, contrary to the McDonald’s Australia Enterprise Agreement 2013 (McDonald’s Enterprise Agreement) in the period up to February 2020 and, from 3 February 2020, contrary to the Fast Food Industry Award 2010 (Fast Food Industry Award).
The pleaded causes of action include contraventions of section 50 of the Fair Work Act 2009 (Cth) (Fair Work Act) (for failure to comply with the relevant enterprise agreement) and section 45 (for failure to comply with the relevant modern award). The applicants also allege franchisor responsibility under section 558B of the Fair Work Act for break contraventions by licensees, and rely on McDonald’s internal rostering and time systems to contend centralised influence and knowledge.
McDonald’s denies the alleged contraventions argued by the applicants and maintains that it has complied with the McDonald’s Enterprise Agreement and Fast Food Industry Award by providing rest breaks to employees including consistently with historic working arrangements.
KFC
A rest‑break class action was filed in October 2023 in the Federal Court and was prosecuted by Shine Lawyers and Gordon Legal, again with union support. The proceeding captured KFC’s Australian franchisor entity, numerous franchisees and company‑operated restaurants. The applicants alleged a failure of KFC to provide 10‑minute paid rest pauses under the KFC national enterprise agreements (2009, 2010, 2020), paid rest breaks under the Fast Food Industry Award and the Queensland/Tweed Heads 2014–2017 Enterprise Agreement.
The applicants sought declarations, compensation and penalties for contraventions of sections 50 and 45 of the Fair Work Act. The applicants also alleged franchisor responsibility under section 558B of the Fair Work Act on the basis that KFC prescribed and controlled key systems used to manage shifts and knew, or could reasonably be expected to have known, that contraventions by franchisees would occur. KFC filed a defence in August 2024, denying the claims, challenging aspects of entitlement construction, and pointing to internal training platforms and policies, third‑party hotlines and rostering tools made available to franchisees.
Grill’d
In December 2025, the latest class action was filed against Grill’d by Gordon Legal, supported and funded by the Shop, Distributive and Allied Employees Association (SDA), on behalf of current and former Grill’d employees who, between December 2019 and December 2025, allegedly did not receive 10‑minute rest breaks on eligible shifts.
The claim targets only company‑operated stores, not franchisees, and seeks compensation and penalties for alleged contraventions of the Fair Work Act flowing from non‑provision of breaks required by applicable industrial instruments.
What’s next for these class actions?
McDonald’s
While the case has been on foot since 2021, it is still in relatively early stages, with recent steps focused on case management and pleadings.
KFC
At a directions hearing before the Federal Court on 6 February 2026, the parties announced settlement terms had been reached with the majority of the 89 franchisee respondents. KFC and the 89 franchisee respondents have agreed to settle the proceedings for $28.8 million, providing compensation to around 90,000 current and former KFC employees.
The settlement is expected to encompass approximately 66% of eligible shifts for which compensation was sought in the class action.
Grill’d
An initial hearing has taken place where a timetable for pleadings was determined including that by 1 May 2026, Grill’d must file and serve a defence and by 22 May 2026, the applicant must file and serve any reply to Grill’d’s defence. As a fresh class action, the proceedings are expected to take several years to progress towards settlement or a trial.
Sector‑wide implications
Plaintiff firms and litigation funders are likely to treat the McDonald’s and Grill’d filings and the KFC settlement as roadmaps for further actions against quick‑service and fast‑casual brands, including vertically integrated chains and franchise networks.
The three existing class actions all focus on the same core themes:
- the 10‑minute break entitlements for 4‑hour and 9‑hour shifts under applicable enterprise agreements and the Fast Food Industry Award;
- enterprise‑wide rostering and timekeeping systems and whether they roster, record and enforce breaks; and
- the interaction between corporate policies, training and compliance frameworks.
While fast food businesses are most exposed, we expect that entrepreneurial plaintiff law firms and unions will be looking at their ability to make similar arguments in favour of casual employees across various industries.
In general, employment class action filings and settlements have increased significantly in recent years (read about it here). In that context, where hundreds or thousands of casual employees may each have been denied rest breaks over an extended period, the aggregate liability in back-pay, compensation, penalties, and legal costs can be very significant.
Further, and although not strictly relevant to the McDonald’s and KFC class actions, on 1 January 2025, wage theft laws commenced under the Fair Work Act. The laws make it a criminal offence for employers to intentionally engage in conduct that results in the underpayment of wages or denial of entitlements to their employees under the Fair Work Act or an industrial instrument.
Penalties for non-compliance with these laws are serious. Companies and other bodies corporate can face fines of up to A$8.25 million or the greater of 3 times the underpayment amount and individuals may face up to 10 years imprisonment or fines of up to A$1.65 million or the greater of 3 times the underpayment amount.
While the focus of the criminal wage theft laws is on ‘intentional’ underpayments, intention can be established where non-compliance is detected but not remediated with appropriate urgency. Additionally, it can be relevant that an employer lacks a ‘culture of compliance’ more broadly. Individuals who are ‘involved in’ the contraventions, including directors and managers, may also face personal liability.
This context highlights the importance for wage compliance to be treated by organisations (and their boards) as a risk governance issue to be addressed with the same proactive urgency as other risk governance issues.
What can employers do?
Employers can take a number of practical steps to uplift their organisation’s industrial instrument literacy and wage compliance and minimise exposure to underpayment claims, potential class actions and regulator scrutiny. Primarily this can be achieved by implementing key governance, wage compliance and review and audit exercises including:
- Mapping legal obligations: identifying and mapping all interrelated legal obligations under legislation and industrial instrument obligations to underpin an organisation’s ability to identify wage compliance issues.
- Implementing a wage compliance value chain (including the allocation of controls): identifying all functions within an organisation, from employee relations, to payroll, to human resources to assess escalation and investigation pathways between the functions to ensure the proactive co-ordination of responsibilities in accordance with mapped obligations. Compliance controls should then be allocated within the organisation’s existing compliance frameworks.
- Governance: undertaking regular audit and risk assessments to determine whether the wage compliance value chain is operating effectively and ensuring the Board receives information addressing wage compliance issues, systems and control measures.
- Adequate resourcing: ensuring that appropriately qualified and experienced staff who are experienced in compliance issues are conducting audits given the technical complexity of many wage compliance issues (including the classification of employees under industrial instruments and interpretation of industrial instrument entitlements and terms).
- Time recording and record-keeping: ensuring time and attendance systems adequately and accurately capture employee hours of work and specific pay entitlements (including breaks taken) and maintaining sufficiently detailed and proper records that are readily accessible and meet the requirements of the Fair Work Act and supporting regulations.
- Policies and training: upskilling managers and supervisors to understand the industrial instruments that apply to the workforce they manage to ensure employees can access their legal entitlements including, by way of example, that rest breaks are taken and employees are genuinely relieved of their duties in that period.
- Remediation: swiftly addressing any remediation required where a wage compliance issue is identified and seeking specialist advice if necessary to mitigate legal, reputational and industrial relations risks.
We discuss in more detail the employer obligations under the Fair Work Act and the latest guidance from the Fair Work Ombudsman (FWO) on wage compliance in our articles here and here.
