Bubble tea giant Chatime has been fined just over $120,000, after the retailer’s Australian arm was found to have paid its “vulnerable workers” as little as $7.59 an hour to make hot and cold takeaway drinks.

The penalties against the Australian wing of Chatime and its managing director were ordered by the Federal Circuit and Family Court, and conclude a long running case lodged by Fair Work.

Chatime — a majority Taiwanese-owned company — was exposed in the media back in 2019.

The national workplace regulator lodged action shortly after, alleging its Australian franchisor Chatime Australia Pty Ltd and its managing director Chen ‘Charlley’ Zhao had been underpaying workers at stores across Melbourne and Sydney.

Many of those underpaid were international students on visas from China and Taiwan.

Many were afraid to speak up about their underpayment out of fear they would be deported for breaching their visa conditions, according to media reports.

“We treat cases involving underpayment of junior workers and visa holders particularly seriously.

“The conduct in this matter, by a franchisor of this size, is completely unacceptable.

“We expect franchisors to not only pay their own staff correctly but to take responsibility for ensuring that their franchisees comply with the law.”

Have you worked for Chatime or another fast-food company? Confidentially email our reporter on terzon.emilia@abc.net.au or em.terzon@proton.me

Fair Work’s case came from audits on the books of stores between August and December 2016.

It alleged employees at 19 stores across Sydney and Melbourne were paid flat rates as low as $7.59 to $24.30 per hour.

It also alleged that Chatime Australia had adopted a practice of not paying Fast Food Industry Award entitlements such as loadings and penalty rates.

This resulted in 152 employees — including 41 junior workers aged below 21, and 95 visa holders — being underpaid a total of $162,533 between the five months scrutinised.

Chatime tried to argue the wage theft wasn’t ‘serious’

Chatime Australia’s legal team argued in the Federal Circuit and Family Court that this contravention “actually represents an amount of little over $1,000 per employee”.

“The court should not find that the contraventions fall into the category of being either ‘serious’ or ‘substantial’,” they added.

Yet, the court concluded that this submission “ignores the range of the underpayments, and in particular the largest of the underpayments”, which was more than $2,300 in wage theft for the five-month period alone.

The court also heard that Mr Zhao had been presented with two ways to pay staff back in 2013.

He had preferred “Costing Model B”, which omitted paying staff with a casual rate loading of 23 per cent and weekend penalties for Saturday and Sunday.

“The contraventions came about through ignorance and inattention by those who managed Chatime’s business,” Judge Nicholas Manousaridis found.

Mr Zhao has now been fined $11,880, while Chatime Australia will need to cough up $120,960 in penalties.

Workplace lawyer Allison Shannon described the Chatime result as a “good outcome” for the Fair Work Ombudsman and said the penalties imposed by the court are “significant”.

“In this case, the penalties were almost as high as the compensation that was owed to employees and this is likely to deter smaller employers and franchisors (in particular) who simply cannot afford such a cost to the business,” she said.

“In addition, franchisors can’t simply stick their head in the sand and should be taking proactive measures to ensure that their franchisees are also compliant with the law and paying their employees correctly.”

Mr Zhao was approached for comment by ABC News and supplied a statement from the company that acknowledged and accepted the court’s findings.

“We see our employees as family,” it says.

The full statement reads:

Chatime is pleased that Judge Manousaridis has handed down his final decision and accepts his findings. At Chatime we see our employees as family and recognise they are the key to our success. Chatime consider that its strongest and most valuable assets are its people. We strive to be an employer of choice and uphold our values of being a fair, open and transparent business playing by the rules and being a good corporate citizen. We recognise that underpayments are a serious issue impacting the franchise industry (indeed the community at large) and we have made and will continue to make significant improvement in people capabilities (internal and external), business/payroll systems, compliance, training, and education to ensure full compliance at all times.