The Fair Work Ombudsman is warning businesses that they face serious consequences if they deliberately underpay employee wages.
This comes after a popular dumpling chain was fined over $4 million in the Federal Court for payroll practices the judge in the case described as “deceitful and unscrupulous”.
Taiwanese restaurant chain, Din Tai Fung, was found to have underpaid workers (mostly young migrants on temporary visas) at restaurants in Sydney and Melbourne, while keeping two sets of time and pay records - one real and one fake - to cover the underpayments.
The chain’s former General Manager and HR Coordinator were each fined $92,232 and $105,084 for their involvement in what the judge called a “calculated scheme to rob employees of their hard-earned wages and deceive the authorities”.
The penalties are the second highest in the Fair Work Ombudsman’s history and factored in that the bulk of the contraventions took place between November 2017 and June 2018 - after the implementation of the Protecting Vulnerable Workers Fair Work Act Amendment that increased penalties for “serious contraventions” of workplace laws and breaches of record-keeping and pay-slip obligations.
Fair Work Ombudsman Anna Booth said employers need to be aware that lawful minimum rates apply to all employees in Australia and that those rates are not negotiable.
“All workers in Australia have the same rights, regardless of nationality and visa status,” she said.
She said the Ombudsman would be prioritising action to protect visa holders and improve compliance in the fast food, restaurant, and café sector.
The federal government has recently made intentional wage underpayment (or “wage theft”) a criminal offence, with significant penalties including prison terms of up to 10 years, or fines up to $7.8 million for a body corporate, $1.56 million for an individual, or three times the underpayment amount if that amount exceeds the maximum fine.
These changes come into effect from 1 January 2025.
While the Din Tai Fung case is an extreme example of intentional and systematic underpayment, we know that many businesses in Australia struggle with pay and payroll compliance. Australia has some of the most complex employment laws in the world.
We recommend that employers undertake a regular payroll health check to ensure that employees are paid correctly and you’re meeting current legislation and award obligations. Be sure to review what payments are being included and excluded, and the number of hours employees work.
A robust payroll system integrated with a comprehensive HR system will help reduce errors and non-compliance and make identifying and resolving any issues quicker. Find out more about MyHR’s leave and payroll software.