Former Brisbane Coffee Club franchisee penalised

The Fair Work Ombudsman has secured more than $180,000 in penalties against a former Coffee Club café franchisee in Brisbane for a number of contraventions.

Brisbane man Saandeep Chokhani, who formerly owned and ran the Coffee Club franchise at the Nundah Village Shopping Centre with this wife, has been penalised $30,000, while a company he and his wife are the directors of, Gaura Nitai Pty Ltd, has been penalised a further $150,900, in the Federal Circuit Court.

The worker is an Indian national in his late 20s who was sponsored by Gaura Nitai to work as a cook at the Nundah Coffee Club outlet on a 457 visa.

The worker’s contract stated he was to be paid an annual salary of $53,900 on a weekly basis, but he endured long periods without receiving any wages at all.

After failing to pay the worker any wages for a four-month period from July to November 2014 and a one-month period in February–March 2015, Chokhani and Gaura Nitai paid the worker $19,334 by electronic transfer on 22 April 2015.

Judge Michael Jarrett found that Chokhani then told the worker to withdraw $18,000 in cash and repay it to him or Chokhani would take steps to cancel his 457 visa.

The worker withdrew $18,000 in cash the same day and repaid it to Chokhani.

“The exploitation of workers from other countries who are inspired to live and work in Australia with the hope of achieving permanent residency needs to be discouraged, in the strongest of terms whenever it is apparent that it has occurred. This is one of those cases,” said Jarrett in his penalty judgement.

“The worker was in a bind. He could not leave his employment because if he did so he would breach a condition of his visa and his ability to remain in Australia would be seriously compromised. He was effectively working for nothing.”

The worker lodged a request for assistance with the Fair Work Ombudsman only after his employment was terminated without notice in November 2015.

When Fair Work inspectors investigated, they found that because of the unlawful cash-back payment, the worker had been underpaid his minimum hourly rates, casual loading, annual leave entitlements, overtime rates, payment in lieu of notice of termination and penalty rates for weekend and public holiday work.

The unlawful cash-back payment and the underpayment of contractual entitlements led to the worker being short-changed a total of $23,546 between September 2013 and November 2015. The worker was back-paid in full earlier this year.

The worker told the Court that the exploitation had led to him incurring credit card debt and needing to borrow money from family and friends.

“The respondents’ conduct was deliberately exploitative of the worker’s position being, as he was, dependent upon Gaura Nitai’s ongoing sponsorship so as not to jeopardise his 457 visa,” Jarrett said.

Fair Work Ombudsman Natalie James said the penalties imposed send a message about the seriousness of exploiting the vulnerability of visa holders.

“We will do everything within our power to pursue any employer who thinks they can exploit the power imbalance they have over migrant workers they employ,” James said.

“Any unscrupulous employer tempted to engage in this sort of conduct should think again because there are serious consequences for this type of behaviour.”

At the time of the investigation, the Fair Work Ombudsman previously had a proactive compliance deed in place with the owners of the Coffee Club Franchise, Minor DKL Food Group (MDKL). James commended the company’s cooperation through the course of the investigation and its approach to ensuring compliance in its network.

Chokhani and Gaura Nitai ceased operating the Nundah Coffee Club outlet in May 2017.

James said exploitation of workers with franchise chains continued to be a concern for the Fair Work Ombudsman and she welcomed the Government’s proposed new laws relating to underpayments within franchise networks.

James said she has also been concerned about the use of cash-back arrangements in a number of matters.

The Fair Work Ombudsman recently commenced legal action against the operator of a Sydney café for allegedly requiring an overseas worker to unlawfully pay-back thousands of dollars of her wages.

The Federal Circuit Court recently ordered record penalties of $532,000 against an Albury café owner and his business in a case involving two Indian workers who were coerced into paying back large portions of their wage to their employer. The workers were threatened with violence and deportation if they refused.

The Fair Work Ombudsman is also currently pursuing legal action in a matter in which an overseas worker employed as a cook on the Gold Coast was allegedly required to pay-back more than $21,000 of her wages to her employer in a cashback scheme:

“It is hard to see a legitimate reason why an employer would require employees to be regularly paying back significant parts of their wage, and I am concerned that cashback schemes are being utilised by unscrupulous operators in an attempt to get around record keeping laws and disguise serious underpayment of wages,” James said.

“We welcome the Government’s commitment to strengthen laws to explicitly cover cash back arrangements.”

Natalie James will speak at the upcoming Restaurant Leader’s Summit, hosted by Hospitality magazine on 31 July.