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Popular café franchisee found to have engaged in ‘grotesque exploitation’

A popular café franchisee has been fined $150,900 in penalties after it underpaid one of its visa workers significantly and then exploited the visa worker in relation to the backpayment of the underpaid amounts.

By way of background, the employee was forced to leave his initial sponsor after a sale of that business, and ended up negotiating sponsorship and employment with the Respondents.  As part of that negotiation, the Respondents agreed to pay the Employee a salary for performing a full-time position as a chef.

During the employment, no matter what times, days or hours the Employee worked, he was paid a flat rate in accordance with his salary.  On some occasions the Employer received no pay at all. Neither overtime nor penalty rates were ever taken into account with respect to the hours he worked.  The Employee raised the underpayment with the Director and his wife, and it was decided by the parties that the Employee was underpaid some $19,334.26.

Now it appears that to rectify the underpayment, the Employer and the Director met at a CBA branch to effect the transfer of the underpaid monies. Immediately after the payment occurred, the Employee was the required to repay $18,000.00 in cash to the Director.

In handing down his decision Judge Jarrett made the following finding:

“I am satisfied that the [Director] did indeed threaten [the Employee] that if he did not pay the money back to the [the Director] he would organise to cancel [the Employee’s] visa. It is not to the point that the Director may not have had the power to achieve that, what is at issue is whether he made such a threat. I am satisfied by the evidence that he did.”

In awarding $150,900 worth of penalties against the Employer, and $30,000 worth of penalties against the Director, Judge Jarrett commented:

“The requirement placed upon [the Employee] to pay back to the [Director] $18,000 of the money that was otherwise owing to him was especially egregious … He has effectively misappropriated [the Employee’s] earnings. …  That was an inappropriate and grotesque exploitation of the power imbalance that existed between the [Director] and [the Employee].”

Employers should note that the exploitation of visa workers is a hot topic in the Federal Parliament at the moment, with the Government contemplating additional legislation with heavier penalties for the protection of vulnerable workers.

Lisa Aitken is an Accredited Specialist in Workplace Relations Law and the Managing Director of Aitken Legal, a law firm specialising in employment law for employers. The information in this column is intended as a guide only.  Liability limited by a scheme approved under professional standards legislation. www.aitkenlegal.com.au.