A former Chatime bubble tea franchisee in Sydney has been penalised $57,800 by the Federal Circuit Court for having underpaid 17 workers through paying them unlawfully low flat rates.
The penalty included a $41,600 penalty against Panol DC Pty Ltd, which formerly operated Chatime Cinema City in the Sydney CBD and fines of $9600 and $6600 respectively for each of its directors, Leiden Emmanuel Panol and Carlo Benjamin Dela Cruz.
The court did, however, suspend the individual penalties for Panol and Dela Cruz for three years, with those penalties to be discharged without requiring payment if they do not breach the Fair Work Act in that time.
According to the Fair Work Ombudsman, employees at Chatime Cinema City were generally paid flat rates of between $13 to $18.55 per hour between January and November 2017. This 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, as well as of Public holiday penalty rates. The underpayments, totalling $46,372, have since been rectified.
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.
“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,” Fair Work Ombudsman Sandra Parker said.
“All franchise outlets are on notice that they must pay staff lawful minimum pay rates and franchisors should take responsibility for ensuring that their franchisees comply with the law,” Parker added.
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 foodservice 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.”
Panol DC Pty Ltd sold its franchise back to the Australian franchisor of Chatime in January 2019.