The Federal Court of Australia imposed a record fine of $15.3 million last month on the former operators of Sushi Bay Pty Ltd for deliberately and repeatedly exploiting migrant workers.
In the ruling, handed down on August 5, 2024, the Court concluded that Sushi Bay, which is now in liquidation, was responsible for contravening several provisions of the Fair Work Act 2009 (Cth) (FW Act) and Fair Work Regulations 2009 (Cth) (FW Regulations) including, falsifying records, underpaying employees and requiring employees to participate in a pay-back scheme.
Our employee relations experts examine the case and what it means for businesses.
Case facts
The investigation into the business began after two complaints from former employees were received by the Fair Work Ombudsman.
From February 2016 to January 2020, 163 workers at Sushi Bay’s outlets in New South Wales, Darwin and Canberra were underpaid more than $650,000.
This involved not paying weekend and public holiday penalties, denial of annual leave entitlements and forcing employees on 457 visas being sponsored by the business to return part of their wages.
As well as trying to conceal the conduct, Sushi Bay falsified records by displaying incorrect working hours and rates of pay on payslips.
A common practice in the organisation involved paying the award rate for a set number of fortnightly hours and a flat cash rate for additional hours with the rate being below award.
Nearly all the affected employees were temporary visa card holders and under 25 years of age, making the individuals vulnerable and not aware of requirements of employers, minimum rates and low English proficiency.
These employees suffered losses with the highest individual underpayment reaching $83,968.
The record fine was ordered due to the deliberate and systematic nature of the contraventions.
Sushi Bay CEO and sole Director Yi Jeong ‘Rebecca’ Shin had previously been fined in 2019 – $124,416 for deliberately underpaying migrant workers.
Therefore, when the Fair Work Ombudsman brought further findings before the Court, some repeated breaches were considered ‘serious contraventions’ under the Protecting Vulnerable Workers Laws and could attract up to 10 times the maximum penalties that would ordinarily apply.
The penalties included $13.7m imposed on Sushi Bay, $1.6m against Yi Jeong and back-payment to all workers in full.
However, due to the liquidation of Sushi Bay, if back-pay cannot be made by the company, part of Yi Jeong penalty will go towards rectifying the underpayments.
Overall, Justice Anna Katzmann described the case as an “exploitation of migrant workers and a shameless but ultimately unsuccessful attempt to conceal it” and ensured that this scenario would be used to send a strong message to other employers that this conduct will not be tolerated.
Key takeaways
This case serves as a powerful reminder to businesses of the significant penalties they may face for wage underpayments.
Additionally, it highlights that the Fair Work Ombudsman will maintain a stringent approach to these breaches, especially with wage theft becoming a criminal offense, commencing January 2025.
Given the complexity of the Australian industrial relations landscape and the varying obligations across numerous industrial instruments, regular audits and compliance assessments are crucial.
How we can help
CCIWA’s HR & Learning Consultancy team offers wage spot checks and assessments to assist businesses achieve compliance and a peace of mind for a fixed fee.
With the recent IR reforms leading to significantly higher penalties for employee underpayments, mistakes regarding employees pay is not something to risk.
Working with CCIWA’s in-house law firm may also be an option to assist with correcting any errors identified. Reach out via email to [email protected] to learn more.
