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Former Chatime franchisee fined almost $58k for underpaying 17 workers

Adrian Flores
Adrian Flores
04 March 2021 1 minute readShare
Chatime franchisee

A former Chatime bubble tea franchisee in Sydney and its directors has been penalised almost $58,000 for underpaying 17 workers with unlawfully low flat rates.

The Federal Circuit Court has imposed a $41,600 penalty against Panol DC Pty Ltd, which formerly operated the Chatime Cinema City outlet on George Street, in the Sydney CBD, according to the Fair Work Ombudsman.

The company’s directors, Leiden Emmanuel Panol and Carlo Benjamin Dela Cruz, have been penalised $9,600 and $6,600 respectively.

Mr Dela Cruz’s full penalty and $6,600 of Mr Panol’s penalty are suspended for three years and will then be discharged without requiring payment, if they do not breach the Fair Work Act in that time.

Between January and November 2017, employees at Chatime Cinema City were generally paid flat rates of between $13 to $18.55 per hour, which resulted in underpayment of the ordinary hourly rates, casual loadings and a special clothing allowance they were entitled to under the Fast Food Industry Award 2010. Public holiday penalty rates were also underpaid.

Total underpayments of $46,372 have been rectified. The company and Mr Panol also breached record-keeping laws.

Eight of the employees were junior workers – aged 20 or younger – when they were underpaid. Nine of the underpaid workers were visa-holders, mostly international students.

Panol DC sold its franchise back to the Australian franchisor of Chatime in January 2019.

Federal Circuit Court Judge Robert Cameron said the underpayments were “significant” for the employees, and there was a need to deter other employers in the takeaway food service industry.

“[T]here is a need to communicate to employers a no-tolerance policy of underpayment and record-keeping contraventions, particularly as that industry employs a vulnerable workforce of visa-holders,” Judge Cameron said.

“I also accept the [Fair Work] Ombudsman’s further submission that there are significant levels of non-compliance within the franchise sector, and the penalty to be imposed on the respondents should recognise this and underline the necessity for franchisees to comply with the workplace laws.”

Fair Work Ombudsman Sandra Parker said the significant penalties sent a message to franchise outlets about paying their employees’ lawful entitlements.

“It is never acceptable to set pay rates that breach employees’ minimum rights, and we continue to prioritise enforcement of the law among fast-food outlets and established and emerging franchise chains, who we know often employ vulnerable young workers and visa-holders,” Ms Parker said.

Former Chatime franchisee fined almost $58k for underpaying 17 workers
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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