Penalties of $891,000 have been Imposed by the Federal Court for Restaurant Chain

The Fairwork Onbusdmasn is acting on the legislated wage underpayment laws passed in December 2023.

As the case below highlights, criminal penalties will also be available against the Directors and Management of companies found to be willingly underpaying staff by December this year. 

In addition, the Wage Inspectorate the Unions have also been granted the right to inspect business wage records.       

Actual Case of Underpayment Reported.

As reported in HRM Magazin, penalties were Imposed, including fines and penalties against the operators of three Hero Sushi takeaway outlets for underpaying workers and providing false records to the Fair Work Ombudsman (FWO).

Hero Sushi outlets in Newcastle and Canberra were penalised $450,000, and the Gold Coast has been penalised $150,000.

The two company directors have also been penalised $170,000, and payroll officers penalised $121,000.

The FWO took court action in February last year. The Court found that 94 workers across the three Hero Sushi outlets were paid flat rates as low as $12 an hour, resulting in underpayments of $700,832.88 between April 2015 and July 2016.

Many of the workers were Korean and Japanese nationals on international student and working holiday visas.

The operators maintained false records across 11 separate occasions, showing inaccurate hours of work and pay rates.

The court found that each of the individuals aided and abetted or were knowingly concerned in some of the company’s breaches of workplace laws.

Ombudsman Sandra Parker welcomed penalties from the court. “Employers need to be aware that penalties for serious record falsification have been increased since the conduct in this case, and any employer engaging in this sort of conduct today can face even higher penalties and sanctions in Court. “This matter should serve as a warning for all businesses that underpay migrant workers. These workers may be particularly vulnerable if they have language barriers or are reluctant to seek help due to their visa status. Any workers with concerns about their pay should contact us.”

The operator’s underpaid employees’ minimum hourly rates, casual loadings, penalty rates, overtime, clothing allowances, and annual leave entitlements under the Fast Food Industry Award 2010. They also underpaid superannuation and breached pay slip laws.

In total:

30 employees were underpaid $215,066.45 at the Newcastle outlet
43 employees were underpaid $293,451.26 at the Canberra outlet
21 employees were underpaid $192,315.17 at the Gold Coast outlet.

Judge Flick added that “the quantum of the penalties to be imposed has to be such that they are not seen as simply the ‘cost of doing business.’ 

Inzenius Help with the Payroll Requirements of the New IR Laws in Australia

Over the years, Inzenius team members have helped dozens of Australian companies reduce their payroll expenses and increase their profits with their Inzenius concept.  

The Better Off Overall Test (BOOT)

“The Better Off Overall Test” (BOOT) is now a complex piece of Australian Federal Industrial Relations legislation requiring businesses to top-up employee pays to the industry’s comparable minimum award conditions. The Fair Work Legislation Amendment (Secure Jobs, Better Pay), the first phase of the act, came into full effect in January 2024.

“I was struggling with a back pay project for over 12 months. The Inzenius team, however, responded to my query and provided the requested data within a day … exceptional service and great software that will assist a lot of other organisations, too!”  Bianca Toce – People & Culture at Advisor Save Group.

Are you aware of the following potential repercussions?

  • Businesses not complying with the BOOT are designated as underpaying the employee(s) with penalties and backpays for any breaches being enforceable by law.
  • Systemic underpaying can result in a criminal charge for the offending organisation as well as against the Directors / Managers themselves. 

If so, the good NEWS is that Inzenius can help by eliminating the risk. We have a proven software solution to efficiently capture employee times worked in any location that accurately automates the comparison of salaried employees’ pay to what they would have earned if they were paid by the appropriate award conditions for easy and seamless pay adjustments. 

If you would like to take the first step, then the highly experienced team at Inzenius are confident that we can quickly determine the best way for the business to protect itself from any costly legal issues and continue to manage its responsibilities moving forward in the most cost-effective manner.

As a responsible employer, you don’t want to get these things wrong.