Federal Court imposes record underpayment penalty

By Karl Rozenbergs and Alexandria Petryshyn 

In Fair Work Ombudsman v HSCC Pty Ltd [2020] FCA 655, the Federal Court has fined three Hero Sushi outlets and their directors a total of $891,000 for underpaying workers and falsifying records.

The penalty follows a decision handed down last year, where the Federal Court found that 94 workers, many of whom were Korean and Japanese nationals on international student and working holiday visas, had been underpaid $700,832.88 between April 2015 and July 2016.

The Federal Court found that the employees were paid flat rates as low as $12 an hour, and had not have received minimum hourly rates, casual loadings, penalty rates, overtime, clothing allowances and annual leave entitlements under the Fast Food Industry Award 2010.

Hero Sushi provided Fair Work Inspectors with hundreds of false records on 11 separate occasions, which showed inaccurate hours of work and pay rates.

In his decision yesterday, Justice Geoffrey Flick held:

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.

Although Hero Sushi did backpay all past employees that it could locate, many others including several who have left Australia are yet to be located.

Lessons for employers

This decision reiterates a number of important lessons for employers, including that:

• employees who are visa title holders are equally as protected as domestic workers under Australian workplace laws;
• simply back paying employees does not absolve an employer of liability;
• the Federal Court is increasingly imposing fines on directors involved in contraventions of workplace laws;
• employers must be familiar with applicable modern awards, in particular with respect to minimum wages (and annual increases to them), penalty rates, overtime and allowances; and
• employers must understand and comply with record-keeping and payslip obligations under the relevant modern award and Fair Work Act and ensure that those records are readily accessible.