Record penalties imposed after underpayment of workers

The penalties are the largest ever achieved as a result of a Fair Work Ombudsman litigation

Record penalties imposed after underpayment of workers

Record penalties of $891,000 have been imposed by the Federal Court against the operators of three Hero Sushi takeaway outlets for underpaying workers and providing false records to the Fair Work Ombudsman (FWO).

HSCC Pty Ltd and HSCK Pty Ltd, which operate Hero Sushi outlets in Newcastle and Canberra respectively, have each been penalised $225,000.

HSPF Pty Ltd, which operates a Hero Sushi outlet on the Gold Coast, has been penalised $150,000.

Moreover, company directors and owners Deuk Hee “William” Lee and Hokun “Robert” Hwang have each been penalised $85,000, and payroll officers employed at Hero Sushi head office, Chang Seok “Tommy” Lee, Ji Won “Brian” Cho and Jung Sun “Jimmy” Kim, have been penalised $75,000, $16,000 and $30,000, respectively.

The FWO took court action in February last year. The Court found that 94 workers across the three Hero Sushi outlets were paid flat rates as low as $12 an hour, resulting in underpayments of $700,832.88 between April 2015 and July 2016.

Many of the workers were Korean and Japanese nationals on international student and working holiday visas.

The operators also provided Fair Work Inspectors with hundreds of pages of false records across 11 separate occasions, showing inaccurate hours of work and pay rates.

The court found that each of the individuals aided and abetted or were knowingly concerned in some of the company’s breaches of workplace laws.

Ombudsman Sandra Parker welcomed the record penalties from the court.

“The penalties imposed against Hero Sushi are the largest ever achieved as a result of a Fair Work Ombudsman litigation and demonstrate that employers who deliberately exploit vulnerable workers will face serious consequences,” said Parker.

“Employers need to be aware that penalties for serious falsification of records have been increased since the conduct occurred in this case and any employer engaging in this sort of conduct today can face even higher penalties and sanctions in Court.

“This matter should serve as a warning for all businesses that underpay migrant workers, who may be particularly vulnerable if they have language barriers or be reluctant to seek help due to their visa status. Any workers with concerns about their pay should contact us.”

Moreover, Fair Work Inspectors discovered the underpayments when auditing the Hero Sushi outlets at Kotara in Newcastle and Pacific Fair on the Gold Coast, and the Hero Sushi kiosk at the Canberra Centre during a proactive activity targeting sushi businesses in 2016.

The operators underpaid employees’ minimum hourly rates, casual loadings, penalty rates, overtime, clothing allowances and annual leave entitlements under the Fast Food Industry Award 2010. Superannuation was also underpaid and pay slip laws were breached.

In total:

30 employees were underpaid $215,066.45 at the Newcastle outlet
43 employees were underpaid $293,451.26 at the Canberra outlet
21 employees were underpaid $192,315.17 at the Gold Coast outlet.

HSCC Pty Ltd, HSCK Pty Ltd and HSPF Pty Ltd have back-paid all underpaid employees they have been able to locate and paid back-payment amounts for other employees to the FWO, which will hold the money in trust for the workers until it can locate them. Many employees are yet to be located, including a number who have left Australia.

Justice Geoffrey Flick said in his judgement that this is a case about “greed and the exploitation of the vulnerable”.

“Those in a position to ruthlessly take advantage of others pursued their goal of seeking to achieve greater profits at the expense of employees. In doing so, a great number of false documents were deliberately and repeatedly created with a view to concealing the fraud being perpetrated. Lies were told to cover up the wrongdoing. It was only when the “game was up” that those responsible admitted their misdeeds.”

Judge Flick added that “the quantum of the penalties to be imposed has to be such that they are not seen as simply the ‘cost of doing business’ in the fast food industry.”

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