The Fair Work Ombudsman (FWO) has secured penalties totalling $132,840 against the Australian franchisor of the Chatime bubble tea chain and its managing director after underpayments of more than $160,000 of vulnerable employees at 19 stores across Sydney and Melbourne.

The Federal Circuit and Family Court has imposed a $120,960 penalty against Chatime Australia Pty Ltd, which is the franchisor of dozens of Chatime outlets around Australia and also directly owns and operates a number of Chatime outlets.

The court has also imposed a $11,880 penalty against Chatime Australia managing director Chen ‘Charlley’ Zhao for his involvement in some of the underpayments.

The underpaid workers worked at 10 Chatime outlets across Sydney in Bondi Junction, Chatswood, Wetherill Park and the CBD; and nine Chatime outlets across Melbourne, in Dandenong, Doncaster, Glen Waverley, Cheltenham and the CBD.

Individual underpayments ranged from $58 to $3,990.

According to the Fair Work Ombudsman’s press release:

• Between August and December 2016, Chatime Australia paid employees at stores it directly operated flat rates as low as $7.59 to $24.30 per hour and 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. Many of the visa holders were international students.

Fair Work Ombudsman Anna Booth said any workers, including visa holders, who have concerns about their pay or entitlements should contact the FWO.

“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,” Ms Booth said.

“The large number of vulnerable employees underpaid in this matter was concerning. We treat cases involving underpayment of junior workers and visa holders particularly seriously.

“We also continue to prioritise compliance in the fast food, restaurants and cafes sector where a high proportion of vulnerable workers are employed.

“Any workers, including visa holders, with concerns about their pay or entitlements should contact us,” she said.

And again, from the FWO’s press release:

“In his judgment, Judge Nicholas Manousaridis rejected Chatime Australia’s submission that the contraventions should not fall into the category of being either “serious” or “substantial”, and found that the matter involved a large number of employees who were underpaid basic Award entitlements.

Judge Manousaridis found that the underpayments were the result of “ignorance and inattention” and that there was a need to send a message that employers who “fail to ensure” employees are paid their minimum entitlements will face “substantial penalties”.

“In imposing the penalty against Mr Zhao, Judge Manousaridis found there was a need to deter other company managers from similar conduct.

“Penalties should be set to signal to persons who manage companies that they will be met with substantial penalties if, through their neglect, they permit companies they manage to contravene terms of an award or any other industrial laws or instruments that might apply,” Judge Manousaridis said.