The Fair Work Ombudsman has secured record penalties of $15.3 million against the former operators of the Sushi Bay outlets in NSW, Darwin and Canberra for deliberately exploiting vulnerable migrant workers, including underpaying staff more than $650,000.
The Federal Court has imposed penalties of $3.2 million against Sushi Bay Pty Ltd (in liq), $5.8 million against Sushi Bay ACT Pty Ltd (in liq), $2.4 million against Auskobay Pty Ltd (in liq), $2.3 million against Auskoja Pty Ltd (in liq), and $1.6 million against Sydney woman Yi Jeong 'Rebecca' Shin, who is the owner and sole director of the companies.
The companies underpaid 163 workers - mostly Korean nationals on student, working holiday and 457 skilled worker visas - a total of $653,129 between February 2016 and January 2020, and falsified records to try to cover it up.
Individual underpayments ranged from $48 to $83,968.
The total penalties are the highest ever secured in a Fair Work Ombudsman legal action, eclipsing the $10.3 million against the Commonwealth Bank and CommSec earlier this year.
The underpayments occurred despite Ms Shin and Sushi Bay ACT having been penalised a total of $124,416 in 2019 for deliberately underpaying its workers, many of whom were migrant workers, in Canberra. Ms Shin and another company associated with her which operated Sushi Bay restaurants in Queensland had also failed audits and been cautioned in previous years.
In the current proceedings, the deliberate and systematic nature of the conduct meant that some of the breaches were 'serious contraventions' under the Protecting Vulnerable Workers laws, and attract up to 10-times the maximum penalties that would ordinarily apply.
Fair Work Ombudsman Anna Booth said the regulator would continue to use all its powers to pursue individuals and companies that exploit workers.
"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," Ms Booth said.
"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.
"Employers also need to be aware that taking action to protect vulnerable workers and improving compliance in the fast food, restaurants and cafés sector are priorities for the Fair Work Ombudsman. Any workers with concerns should contact us."
Fair Work Inspectors investigated after receiving underpayment allegations from two former workers and discovered widespread underpayment of entitlements throughout the Sushi Bay network.
Many of the underpaid employees were young workers aged under 25. They generally worked as cooks, kitchen attendants and food and beverage attendants.
More than $600,000 of the underpayments related to workers located in NSW, across outlets at Carlingford, Campbelltown, Charlestown, Forster, Glendale, Liverpool, Merrylands, Miranda, Miranda Westfield, Parramatta, Penrith, Rouse Hill, Shellharbour, and Wollongong.
There were also underpayments of four workers who had worked at an outlet in Darwin, owned and operated by Sushi Bay Pty Ltd (in liq), and workers located at an outlet in Belconnen, in Canberra, owned and operated by Sushi Bay ACT Pty Ltd (in liq).
All outlets traded as 'Sushi Bay', except for the outlet at Miranda Westfield, which traded as 'Moduwa Ramen and Bar'.
In addition to imposing the penalties, Justice Anna Katzmann had previously ordered the companies to back-pay all workers in full. With the companies now in liquidation, Justice Katzmann has ordered that if back-pay cannot be obtained from the companies, part of Ms Shin's penalty should go towards rectifying the underpayment of the workers.
All Sushi Bay outlets have now closed, with the exception of the outlet at Campbelltown in Sydney, which is under the liquidator's control.
Most of the underpayments relate to the failure by the companies to pay adequate overtime rates, due to a practice of paying flat cash rates of between $14 and $18.50 an hour for some overtime hours worked, despite workers being entitled to overtime rates of between $25.94 and $48.24 an hour, under the Restaurant Industry Award 2010.
Minimum wage rates, weekend and public holiday penalty rates and annual leave entitlements were also underpaid, and Sushi Bay Pty Ltd (in liq) knowingly made false or misleading records and provided them to the Fair Work Ombudsman.
Twenty of the employees, who were subclass 457 visa holders, were subjected to an unlawful cashback arrangement under which they were sometimes required to pay back hundreds of dollars from their fortnightly wages.
Ms Shin was responsible for approving and implementing the exploitative payment practices for the Sushi Bay outlets and was involved in many of the contraventions, including some serious contraventions.
Justice Katzmann found that the conduct was "both calculated and audacious" and said: "This is yet another case of the exploitation of immigrant workers and a shameless but ultimately unsuccessful attempt to conceal it".
Justice Katzmann largely dismissed Ms Shin's attempts to deny or minimise her role in the exploitation of the workers and found that Ms Shin had "a history of dishonesty".
Justice Katzmann said there was a need "to send a strong signal to employers in the industry that conduct of this kind is unacceptable and will not be tolerated".
The penalties must "make it crystal clear to Ms Shin and other people and companies who employ staff that contraventions of the kind the respondents committed are both unacceptable and economically irrational," Justice Katzmann said.
It is the fourth case in 2024 where the Fair Work Ombudsman has secured total penalties of more than $1 million for breaches impacting workers.
Justice Katzmann also recommended that Ms Shin be referred to the Australian Taxation Office, the Department of Home Affairs and the Australian Securities and Investments Commission.
The Fair Work Ombudsman has established a new tripartite reference group to help improve compliance in the fast food, restaurants and cafes sector. The reference group will enable increased collaboration with key sector stakeholders, and opportunities for them to provide advice and feedback to the FWO on workplace relations issues.
