A hefty penalty has been issued to the Australian franchisor of Chatime and its managing director for underpaying staff more than $160,000.
Staff who worked at 19 Chatime Australia Pty Ltd stores across Sydney and Melbourne were short-changed between August and December 2016 due to the company paying flat rates spanning from $7.59-24.30 per hour.
152 workers, many of who were international students and visa holders, were underpaid a total of $162,533 during this period. Individual underpayments ranged from $58 all the way up to $3,990.
Fair Work Inspectors found workers were also underpaid overtime rates, casual loadings, and penalty rates.
The matter was recently heard in the Federal Circuit and Family Court, with Chatime Australia Pty Ltd and managing director Chen ‘Charlley’ Zhao facing off against the Fair Work Ombudsman.
The company argued the submission should not fall into either the “serious” or “substantial”, which was rejected by Judge Nicholas Manousaridis.
“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,” said Judge Manousaridis.
The court issued a $120,960 penalty to Chatime Australia Pty Ltd as well as a $11,880 penalty to Zhao for his involvement in some of the underpayments.
Affected staff members have now been back-paid.
“The conduct in this matter, by a franchisor of this size, is completely unacceptable,” said Fair Work Ombudsman Anna Booth. “We expect franchisors to not only pay their own staff correctly but to take responsibility for ensuring that their franchisees comply with the law.”
