In a landmark decision, the Fair Work Ombudsman has achieved record penalties totalling $15.3 million against the former operators of a Sushi chain across New South Wales, Darwin, and Canberra for the egregious exploitation of vulnerable migrant workers. The Federal Court found that these operators had underpaid staff by more than $650,000.

The court found that 163 workers, primarily Korean nationals on student, working holiday, and 457 skilled worker visas, were underpaid a total of $653,129 between February 2016 and January 2020. Individual underpayments ranged from $48 to $83,968. The operators also falsified records to obscure these violations.

Historical Context and Legal Implications

This penalty surpasses the previous record of $10.3 million against the financial sector earlier this year. Notably, the Owner and the Sushi chain in the ACT had already been penalised $124,416 in 2019 for similar violations in Canberra. Despite past penalties and failed audits, the exploitation continued.

The Federal Court highlighted these contraventions' deliberate and systematic nature, classifying some as 'serious contraventions' under the Protecting Vulnerable Workers laws, which carry penalties up to 10 times the normal maximum.

Fair Work Ombudsman’s Stance

Anna Booth, the Fair Work Ombudsman, emphasised the agency’s commitment to protecting workers and prosecuting offenders. “The record penalties imposed in this matter drive home the fact that deliberately and repeatedly exploiting workers, including vulnerable migrant workers, is reprehensible conduct that will not be tolerated in Australia,” she said.

Employer Obligations and Consequences

Employers must recognise the severe consequences of underpaying and exploiting workers. The Fair Work Ombudsman has prioritised the protection of vulnerable workers and compliance within the fast food, restaurants, and cafés sectors. This case serves as a stark warning: underpaying migrant workers and falsifying records will lead to significant penalties.

Justice Anna Katzmann ordered that the penalties be used to back-pay the affected workers. With the companies in liquidation, part of the owner's penalty will also go towards rectifying the underpayments. This case marks the fourth in 2024 where the Fair Work Ombudsman has secured total penalties exceeding $1 million.

Industry Impact

The decision sends a strong message to the industry: exploiting workers is unacceptable and will not be tolerated. Employers must ensure compliance with employment laws to avoid severe financial and reputational damage.

What Employers Need to Know

  • Compliance: Ensure all payment practices adhere to the Fair Work Act and relevant awards.
  • Vulnerable Workers: Be particularly vigilant about the treatment of migrant workers who may be unaware of their rights.
  • Record-Keeping: Maintain accurate records of all employee payments and entitlements.
  • Penalties: Understand that serious contraventions can lead to substantial penalties, significantly impacting your business.