Large Penalty for Wage Underpayment

A sushi restaurant was ordered to pay $355,000 in penalties after the Fair Work Ombudsman (FWO) brought a case against them for underpaying employees and falsifying records.
The case brought against Delishco Pty Ltd (the Company), which operates as ‘Moga Izakaya & Sushi’ in Brisbane, was heard in the Federal Circuit and Family Court. A $305,000 penalty was ordered against the Company, while the remaining $50,000 penalty was personally against the Company’s director, Yinan Yang, who manages the restaurant. The total penalty is one of the highest the FWO has ever obtained.
The Facts
The FWO formally cautioned the Company in 2019 when it was found they had underpaid their employees a total of $75,716 between December 2018 and March 2019.
Fair Work inspectors inspected the Company after one of the Company’s workers came forward to the FWO, alleging he was being paid only $16 per hour. The inspection found that 34 employees of the Company were underpaid minimum wage rates, casual loadings, overtime, split-shift allowances, and penalty rates for weekend, public holiday and night work under the Restaurant Industry Award 2010 and National Employment Standards.
Moreover, it was found that the Company knowingly provided the Fair Work inspectors with falsified payslips and records in order to conceal their illegal conduct.
Most of the employees affected were casual and their individual underpayments ranged from $92 to $9588.
Even after the formal caution, the Company refused to backpay staff until the FWO commenced legal proceedings.
The Decision
The court found that the underpayment was indeed deliberate and was a part of a systemic pattern of conduct. As such, the court was satisfied that the underpayment contraventions were to be considered ‘serious contraventions’ under the Protecting Vulnerable Workers laws in the Fair Work Act 2009 (Cth), therefore making the Company subject to harsher penalties. Furthermore, most of the employees were Chinese, Japanese, Korean or Thai visa holders and many of which were young workers aged between 19 and 21.
This resulted in a $305,000 penalty for the Company and a personal penalty of $50,000 for the Company’s manager was the primary person responsible for the illegal conduct of the Company.
The FWO, Sandra Parker, noted that the large penalty in this case highlights that employer conduct that deliberately exploits migrant workers “will not be tolerated”. Judge Salvatore Vasta of the Federal Circuit and Family Court added that there was a need to impose harsh penalties in order to deter any similar conduct in the future.
Employers should be aware of the following takeaways from this case:
1.         Notices from the FWO are serious, we strongly advise that you contact our firm if you receive a notice. This allows you to make an informed response after obtaining legal advice;
2.         It is very important to comply with directions from the FWO;
3.         Our firm offers Modern Award audits to ensure compliance, conducting a review proactively is encouraged to avoid underpayment prosecution by the FWO. It is important to note that even if you pay your employees above award rates, this does not guarantee that the engagement is award compliant.
If you have any questions about wage underpayment or award compliance generally, please do not hesitate to contact Nick StevensPeter HindelehDaphne Klianis or Josh Hoggett.

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