On 7 November 2022, the Fair Work Ombudsman (‘FWO’) secured a near-record penalty of $475,200 in court against operator of the 85 Degrees Cafe chain (‘the Company’) for taking advantage of young Taiwanese students under the guise of a purported internship arrangement.
The students were aged between 20 and 22 at the time of work and spoke little English. Each of the students were underpaid between $50,123 and $58,248 between July 2016 and June 2017.
The Company paid the students between $1,650 to $1,750 per month during their purported internship for performing up to 70 hours of work per week in the Company’s factories and retail stores in Sydney.
The FWO investigated the matter after receiving requests for assistance from the students. They were students at the Taipei City University of Science and Technology in Taiwan and came to Australia on working-holiday visas. The students worked across the Company’s stores in St Peters, Hurstville and in the CBD preparing and packing cakes and bread, as well as cleaning.
Justice Robert Bromwich found that the underpayments by the Company were deliberate. His Honour stated, “I am unable to accept that the intern Employees were anything other than highly susceptible to exploitation.” His Honour maintained that the penalties should deter other employers for similar conduct.
The FWO has similarly said that any employer in Australia that deliberately underplays visa holders will face serious consequences.
The nature of this case emphasises the risks and ultimate penalty for employers if they underpay their employees. As such, employers must pay the lawful minimum pay rates for all hours worked, regardless of a worker’s nationality or visa status.
Our firm offers Modern Award audits to ensure compliance and conducting a proactive review so that your company can 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 due to a number of other factors such as overtime and various allowances.
If you have any questions about wage underpayment, award compliance generally or our firm’s Modern Award Audit procedure, please do not hesitate to contact Nick Stevens, Peter Hindeleh, Daphne Klianis or Josh Hoggett.