Sushi outlet operator and his accountant fined $200,000 for “calculated and deliberate” underpayment of foreign workers

SmartCompany, January 25, 2018

New South Wales sushi outlet operator and an accountant have been slugged close to $200,000 in penalties for their part in an unlawful internship program that exploited young overseas workers.

Kjoo Pty Ltd, which runs the Masaki sushi outlet at Stockland Shellharbour Shopping Centre, was penalised in the Federal Circuit Court after it found the business underpaid three foreign workers a total of $51,025 between September 2014 and July 2015.

The company itself was penalised $161,760, with the manager and part-owner fined $32,352 for his part in the contraventions.

The mananger’s accountant was also fined $4,608 for his part in preparing false records submitted during the Fair Work Ombudsman’s investigation.

The three underpaid workers were all women from Korea on 417 working holiday visas, aged between 20 and 21 and spoke little English.

The staff members were studying at a college in Korea and came to Australia for “work experience” under an agreement the sushi outlet had formed with the college.

Under the purported internship arrangement, the workers were paid flat rates of between $12 and $13.50 per hour in cash.

The Fair Work Ombudsman questioned the amounts, arguing such an arrangement was not authorised under Australian law because the work performed at Masaki was not a formal part of the workers’ college studies.

The workers were found instead to be entitled to minimum pay and penalty rates that apply under the Fast Food Industry Award 2010 – with hourly rates ranging from $16.67 to $18.99 plus casual loadings and penalty rates ranging from $23 to $47 an hour.

Unlawful deductions were also found to have been made from the workers’ wages for accommodation.

The underpayments were rectified prior to the case going to court.

Judge Philip Dowdy was scathing in his judgment, saying there had been a “deliberate, intentional and informed decision by [the company], through [the manager], to underpay the employees to gain a financial advantage for its business.”

In addition, he labelled the creation of false documentation in the course of the investigation as “the highest level of dishonesty.”

He was just as critical of the accountant, saying that as a practising accountant he had breached fundamental obligations of the profession.

Read more: Sushi Kuni restaurant director and operating company fined $136,000 for “deliberate and calculated” employee underpayment

Such cases becoming more common

Director of Viridian Lawyers, Richard Prangell, says such cases are becoming all too common.

“It’s a disappointing example. There are so many resources for business owners to get up to speed with Australian employment law,” he says.

“This seems to be a relatively conscious attempt on the director’s part to circumvent [the law].”

A key take away from this case is the ombudsman’s willingness to go after individuals involved rather than just the companies.

“What’s quite notable here is that they fined the director, not just the company – doubly so that they issued a fine against the accountant,” he says.

“Business advisers generally might come under the scrutiny of the ombudsman and therefore potentially face fines for their roles in contraventions.”

Damin Murdock, principal lawyer at MurdockCheng Legal Practice, says a key element of this case is the company’s use of an “internship arrangement” that failed to meet the vocational placement definition under the Fair Work Act.

“Vocational placement under the Fair Work Act is permitted for voluntary experience on an unpaid basis,” he explains.

“But for it to be eligible to be a vocational placement, there’s a requirement for that work experience to be a requirement of an education or training course and that it has to be an authorised arrangement.

“But in this scenario, it looks like a sham because there appeared to be no connection between the training course and the work experience in the sushi restaurant.”

Murdock says the accountant’s role in providing false documents should also serve as a warning.

“They’ve brought a claim against the accountant too because he has falsified payslips and in doing that, he was aiding and abetting Kjoo in misleading and deceiving the Fair Work Ombudsman in the investigation.”

SmartCompany was unable to reach Masaki sushi for comment.