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Record $900,000 fine for sushi operators for defrauding staff

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
19 May 2020 2 minute readShare

The FWO has sent a warning to all businesses that underpay migrant workers, following the issuance of a record $891,000 penalty to sushi operators for defrauding their staff.

The Federal Court has imposed record penalties of $891,000 against the operators of three Hero Sushi takeaway outlets for deliberately underpaying 94 staff to the tune of $700,832.88 between April 2015 and July 2016.

In his judgment, Justice Geoffrey Flick said: “This is a case about greed and the exploitation of the vulnerable.

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“Those in a position to ruthlessly take advantage of others pursued their goal of seeking to achieve greater profits at the expense of employees.

“In doing so, a great number of false documents were deliberately and repeatedly created with a view to concealing the fraud being perpetrated. Lies were told to cover up the wrongdoing. It was only when the ‘game was up’ that those responsible admitted their misdeeds.”

 

The court found that Hero Sushi outlets in Newcastle, Canberra and on the Gold Coast paid their employees, mostly Korean and Japanese nationals on international student and working holiday visas, flat rates as low as $12 an hour.

As a result, the outlets’ operators — HSCC Pty Ltd, HSCK Pty Ltd and HSPF Pty Ltd — have been slapped with fines of $600,000, while two company directors and owners have received a further fine of $85,000 each.

Additionally, three payroll officers have been penalised a sum total of over $120,000 for aiding and abetting or knowingly being involved in some of the company’s breaches of workplace laws.

Judge Flick said 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’ in the fast food industry”.

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According to the Fair Work Ombudsman, besides underpaying staff, the operators also provided Fair Work inspectors with hundreds of pages of false records across 11 separate occasions, showing inaccurate hours of work and pay rates.  

“The penalties imposed against Hero Sushi are the largest ever achieved as a result of a Fair Work Ombudsman litigation and demonstrate that employers who deliberately exploit vulnerable workers will face serious consequences,” said Fair Work Ombudsman Sandra Parker.

“Employers need to be aware that penalties for serious falsification of records have been increased since the conduct occurred in this case, and any employer engaging in this sort of conduct today can face even higher penalties and sanctions in court.”

Ms Parker issued a warning to all businesses knowingly breaking the law.

“This matter should serve as a warning for all businesses that underpay migrant workers, who may be particularly vulnerable if they have language barriers or be reluctant to seek help due to their visa status. Any workers with concerns about their pay should contact us.”

Fair Work inspectors discovered the underpayments when auditing the Hero Sushi outlets at Kotara in Newcastle and Pacific Fair on the Gold Coast, and the Hero Sushi kiosk at the Canberra Centre during a proactive activity targeting sushi businesses in 2016.

The operators underpaid employees’ minimum hourly rates, casual loadings, penalty rates, overtime, clothing allowances and annual leave entitlements under the Fast Food Industry Award 2010. Superannuation was also underpaid and payslip laws were breached.

Some employees have been back-paid, while a number have left Australia, with the Fair Work Ombudsman said to hold on to their money until they are located.

In addition to the penalties, Justice Flick also ordered the companies to display workplace notices detailing employee rights and entitlements and to commission an external audit of its compliance with workplace laws within 28 days and report the results to the Fair Work Ombudsman.

Record $900,000 fine for sushi operators for defrauding staff
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has an extensive career as a journalist across finance, business and market intelligence. Prior to joining Momentum Media, Maja spent several years unravelling social, political and economic intricacies in Eastern Europe. 

You can email Maja on [email protected] 

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