Perth operator penalised for poor record-keeping

The operator of a popular Perth restaurant chain has been penalised in for record-keeping practices that were so poor they prevented the Fair Work Ombudsman from determining the full extent of underpayments of vulnerable overseas workers.

Tram Hoang Han, who controls the Han’s Café franchise, has been penalised $7,500 and two companies of which she is currently the sole director – Han Investments Pty Ltd and Han’s Café Pty Ltd – have each been penalised a further $15,000.

Legal action taken by the Fair Work Ombudsman relates to Han’s Café outlets Han formerly ran at Forrest Chase in the CBD and Subiaco, Hillarys and Midland.

The Fair Work Ombudsman audited several Han’s Café outlets in 2014 during the third and final wave of its three year National Hospitality Industry Campaign.

The Fair Work Ombudsman had previously advised Han about the need to comply with minimum Award pay rates when investigating a request for assistance from an employee – and the 2014 audits raised concerns that Han’s outlets had a standard practice to pay low, flat rates and failed to pay penalties for weekend, overtime and evening work.

The Fair Work Ombudsman’s 2014 audit was able to calculate that 100 employees across four Han’s Café restaurants had been underpaid $30,440 as a result of being short-changed their minimum hourly rate. This money was back-paid to the workers – including international students, 417 working holiday visa-holders and 457 skilled worker visa-holders – in 2015.

However, the practices for keeping time-and-wages records at the outlets were so poor that they hindered the Fair Work Ombudsman from quantifying the full extent of the underpaid wages and entitlements, including penalty rates and overtime.  When inspectors returned to check on corrective action in October 2015, Han told Fair Work inspectors she was only keeping timesheets for one week.

Under workplace laws, employers must keep staff records for seven years.

In his judgment, Justice Michael Barker described the record-keeping contraventions as “serious”.

“This is an area of employment where, unless record-keeping obligations are met, the ability of a regulator, and indeed individual employees, to identify an employer’s breach of employment obligations is made difficult, if not on occasion impossible – as indeed this case emphasises,” Barker said.

“The record keeping obligations are directed at ensuring the creation of records as a critical tool in the assessment of compliance with workplace laws. Unless an employer complies with the law, and makes and keeps employment records, an effective safety net for employees is difficult to maintain. The result is that employees are more vulnerable to exploitation. The job of the Fair Work Ombudsman, as regulator, in detecting and protecting employees’ workplace entitlements is reduced in effectiveness.”

Barker said the conduct “should not be seen as mere contraventions of some lower order”.

“The failure to maintain records truly strikes at the very foundation of the regulatory scheme which is designed to ensure that employees are paid their legal entitlements,” Barker said. “As the Fair Work Ombudsman submits, the failure will be considered particularly egregious where employees are in a class of uninformed or poorly informed people, or where they are transient workers dependent on the ongoing support of their employer for their work, as indeed the evidence shows is the case here.”

Barker found there was little evidence of contrition or corrective action.

“The need to implement processes within the businesses to ensure that records were properly kept had been lacking for some time, and were not changed even when questions were asked.

“The respondents, while continuing to experience business difficulties, need to fully appreciate that the workplace laws have to be complied and are not to be bent or relaxed simply because a particular employer considers that its business will suffer financially if they comply.

“In the circumstances of this particular case, I am not satisfied that the respondents have simply made an error which is unlikely ever to be repeated.”