The serious legal consequences for employers who exploit vulnerable workers were highlighted by the Federal Court last year in the case of Fair Work Ombudsman v Sushi Bay Pty Ltd (in liq) (No 3) [2024] FCA 869.
The Federal Court imposed record penalties totalling $15.3 million against the operators of Sushi Bay outlets for the deliberate exploitation of migrant workers.
Between February 2016 and January 2020, 163 employees — primarily Korean nationals on student, working holiday, and 457 skilled worker visas — were underpaid over $650,000. The underpayments ranged from $48 to $83,968 per individual.
Five companies paid flat cash rates of between $14 and $18.50 per hour for overtime hours worked, despite workers being entitled to overtime and penalty rates between $25.94 and $48.24 per hour.
The companies were collectively fined $13.7M and the sole director personally fined $1.6 million for her involvement in the exploitative payment practices of the companies. The director and one of the companies had previously been penalised for deliberately underpaying workers. The companies had previously been ordered to back-pay all workers. If the companies, now in liquidation, cannot make such payment, part of the director’s penalty is to be used to rectify the underpayment of the workers.
Additionally, 20 employees on subclass 457 visas were subjected to unlawful cashback arrangements, requiring them to repay hundreds of dollars from their fortnightly wages. The companies falsified records in an attempt to conceal their conduct.
The deliberate and systematic nature of the conduct elevated some of the breaches to ‘serious contraventions’, which attracted increased penalties. Justice Anna Katzmann noted the need to send a strong signal to employers that such conduct is unacceptable and will not be tolerated.
The conduct occurred before the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 was passed. Intentional underpayment of wages or entitlement is now a criminal offence under the Fair Work Act 2009.
For advice regarding your obligations to employees, please contact Heather Richardson.
