Restaurant fined $400,000 for systematic exploitation

The Fair Work Ombudsman has secured almost $400,000 in penalties against a company and three individuals for systematic exploitation of overseas workers at a Chinese restaurant in NSW and fabricating records to try to cover it up.

The penalties have been imposed in the Federal Court after 85 employees at the New Shanghai Charlestown restaurant at Charlestown were underpaid a total of $583,688 over a 16-month period in 2013-2014.

Justice Robert Bromwich has imposed a $54,672 penalty against the mastermind of the exploitation, restaurant owner Zhong Yuan “John” Chen, and penalised his company NSH North Pty Ltd a further $301,920. Bromwich imposed a $18,496 penalty against restaurant manager Jin Xu for her involvement in the exploitation, as well as a $21,760 penalty against the restaurant’s HR manager Ting “Sarah” Zhu.

The Fair Work Ombudsman discovered that many workers at the restaurant – mostly visa holders from Asia – were paid as little as $10 an hour. Under the Restaurant Industry Award at the time, most were entitled to be paid more than $20 an hour for ordinary hours and between $24 and $45 an hour for weekend, public holiday and overtime work.

When the Fair Work Ombudsman began its investigation, NSH North provided fabricated records to inspectors that purported to show staff had been paid correctly. The company later provided the true employment records, only after the issue was raised with them by the Fair Work Inspector and a further Notice to Produce issued, showing the unlawfully low, flat rates the employees were actually paid. Bromwich found that the contraventions involved “serious and premeditated conduct” and “encompassed a widespread, systematic and prolonged failure to accord employees their basic entitlements”.

NSH North, Chen, Xu and Zhu all admitted in Court that they were involved in deliberately underpaying the workers and making use of fabricated records. NSH North has rectified more than $450,000 of the underpayments and is attempting to locate the employees who have not yet been back-paid. Otherwise, the company will pay the amounts owing to the Commonwealth to be held in trust for the employees.

However, Zhu, whose duties included processing payroll and arranging staff wage payments, submitted that her culpability was reduced due to the fact she was at all times acting under the direction of Chen. At the time of the underpayments, Zhu was being sponsored by a related company, NSH Restaurants Pty Ltd, on a 457 skilled worker visa and was being paid an annual salary of $100,000.

Bromwich rejected Zhu’s submission, finding she had “acted in her own interests” in choosing to be a knowing participant in the underpayments and in taking an active role in the creation of false records. “There is nothing wrong with sending the message that an employee should indeed resign if that is the only alternative to continuing to participate knowingly in illegal activity, ideally coupled with reporting the conduct, in a case such as this, to the FWO,” Bromwich said.

“In no sense was Ms Sarah Zhu a victim of the conduct. If this aspect of Ms Sarah Zhu’s circumstances is really mitigation at all, it cannot be given much weight. That is so both as a matter of public policy in requiring individuals to put compliance with the law ahead of their personal interests, and having regard to Ms Sarah Zhu’s knowledge that the law was being disobeyed for the entire period of over 16 months. Moreover, she took an active role in the attempt to thwart the FWO investigation,” Bromwich added.

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