$15m fine for underpayments a ‘powerful reminder’ of duties

Recently, the Fair Work Ombudsman (FWO) secured record penalties of $15.3 million against former operators of the Sushi Bay outlets in NSW, Darwin, and Canberra for underpaying their migrant workers.

As previously reported on HR Leader, record penalties were imposed by the Federal Court against various sushi outlets for deliberately exploiting vulnerable migrant workers, including underpaying staff more than $650,000.

The total penalties were the highest the FWO ever secured in a legal action, eclipsing the $10.3 million against the Commonwealth Bank and CommSec earlier this year, with the individual underpayments ranging from $48 to $83,968.

The penalties were scattered among the various outlets, with $1.6 million going against Sydney woman Yi Jeong ‘Rebecca’ Shin, who is the owner and sole director of the company.

The record-breaking penalties served as a stark reminder for employers who think they can get away with exploiting their vulnerable employees.

“The record penalties imposed in this matter drive home the fact that deliberately and repeatedly exploiting workers, including vulnerable migrant workers, is reprehensible conduct that will not be tolerated in Australia,” said Fair Work ombudsman Anna Booth.

“If you deliberately underpay migrant workers and try to cover it up with false or misleading records, you will be found out and will pay a heavy price.

“We treat cases involving underpayment of migrant workers particularly seriously because we are conscious that they can be vulnerable due to factors such as a lack of awareness of their entitlements or a reluctance to complain.”

BDO migration services principal lawyer Rebecca Thomson said the ruling marks a significant moment in the enforcement of the laws for the protection of vulnerable workers.

“The severe penalty of $15.3 million highlights the importance of adhering to legal standards and protecting vulnerable workers from exploitation,” said Thomson.

The prominence of the Sushi Bay outlets staff primarily being migrants highlights the egregious nature of the crime, as Shin (the director) was mainly exploiting Korean nationals on temporary visas.

Thomson emphasised the fact that the case was referred to the Department of Home Affairs, highlighting the heightened scrutiny on sponsorship obligations.

“Employers must adhere strictly to their sponsorship agreements,” Thomson said.

“Breaches can lead to severe penalties, including fines and restrictions on future sponsorships. Compliance is essential not just for legal adherence but also for maintaining the ability to recruit and retain skilled workers.

“Regular audits and assessments of compliance with wage rates, working conditions, and visa obligations are critical. Employers must ensure their policies align with legal requirements, particularly for staff on temporary visas, to guarantee fair compensation and treatment.”

Although the Australian industrial landscape is complex, with varying obligations spanning numerous industrial instruments, the FWO will continue to hold employers to account, especially when it comes to wage underpayments.

“Accurate record keeping and the provision of pay slips are vital for compliance. Employers must retain detailed records for at least seven years to ensure effective investigation and enforcement of employment standards,” Thomson said.

“This case serves as a powerful reminder of the importance of maintaining high ethical standards in employment practices.”