'The large number of vulnerable employees underpaid in this matter was concerning'
The franchisor of the Chatime bubble tea chain and its managing director have received a total penalty worth over $132,000 after underpaying 152 employees across Sydney and Melbourne.
The Federal Circuit and Family Court imposed a $120,960 penalty against Chatime Australia Pty Ltd, and an $11,880 penalty against Chatime Australia managing director Chen Zhao for his involvement in some of the underpayments.
The penalties came after Chatime Australia underpaid 152 employees a total of $162,533 after directly operating flat rates as low as $7.59 to $24.30 per hour and neglecting to pay Fast Food Industry Award entitlements, such as loadings and penalty rates.
Judge Nicholas Manousaridis said the underpayments were the result of "ignorance and inattention," stressing the need to deter other employers from committing similar practices in the future.
"Penalties should be set to signal to persons who manage companies that they will be met with substantial penalties if, through their neglect, they permit companies they manage to contravene terms of an award or any other industrial laws or instruments that might apply," Manousaridis said in a statement.
The underpayments were first discovered by the Fair Work Ombudsman (FWO) during proactive audits. The FWO uncovered that workers were underpaid their ordinary hourly rates, overtime rates, casual loadings, and penalty rates for weekend, night, and public holiday work. They were also underpaid in annual leave entitlements and minimum engagement pay.
A total of 152 employees, who include 41 junior workers aged below 21 and 95 visa holders, were affected. These workers were employed at 10 Chatime outlets across Sydney in Bondi Junction, Chatswood, Wetherill Park and the CBD; and nine Chatime outlets across Melbourne, in Dandenong, Doncaster, Glen Waverley, Cheltenham and the CBD.
The biggest individual underpayment reached $3,990, while the smallest amount was at least $58.
Fair Work Ombudsman Ana Booth slammed the franchisor's conduct as "completely unacceptable."
"We expect franchisors to not only pay their own staff correctly but to take responsibility for ensuring that their franchisees comply with the law," Booth said in a statement.
"The large number of vulnerable employees underpaid in this matter was concerning. We treat cases involving underpayment of junior workers and visa holders particularly seriously."
According to the FWO, the underpayments have been rectified in full after the FWO's audit.
Booth said the FWO will continue to prioritise compliance in the fast food, restaurant, and cafe sector, where a high proportion of vulnerable workers are employed.
"Any workers, including visa holders, with concerns about their pay or entitlements should contact us," she added.
