The Fair Work Ombudsman has been busy with underpayment of wages problems with several workplaces including big names such as the Commonwealth Bank of Australia.
The Fair Ombudsman have taken this to another level securing a historic $15.3 million in penalties against the former operators of Sushi Bay outlets in NSW, Darwin, and Canberra. This legal action comes after the deliberate underpayment of over $650,000 to 163 migrant workers between 2016 and 2020, with penalties eclipsing previous records in Fair Work history.
Fair Work Ombudsman v Sushi Bay Pty Ltd (in liq) (No 3) [2024] FCA 869 (5 August 2024)
In Fair Work Ombudsman v Sushi Bay Pty Ltd (in liq) (No 3) [2024] FCA 869 (5 August 2024) the workers, primarily young Koreans on student and work visas, were paid flat rates as low as $14 per hour, significantly below the legal overtime and penalty rates required under Australian law, modern awards and any industrial instrument. The Federal Court found that the companies, including Sushi Bay Pty Ltd, Sushi Bay ACT Pty Ltd, Auskobay Pty Ltd, and Auskoja Pty Ltd, falsified records to conceal their actions, with individual underpayments ranging up to nearly $84,000.
Fines
The Federal Court made the following findings:
- Sushi Bay Pty Ltd issued a $3.2 million penalty
- Sushi Bay ACT Pty Ltd issued $5.8 million penalty
- Auskobay Pty Ltd issued a $2.4 million penalty
- Auskoja Pty Ltd issued a $2.3 million penalty
- Sole Director, Yi Jeong ‘Rebecca’ Shin was fined $1.6 million.
Justice Anna Katzmann presided over the case, labelling the operators’ conduct as “calculated and audacious,” targeting vulnerable migrant workers who lacked awareness of their entitlements or were hesitant to report their exploitation.
The penalties imposed are the highest ever in a Fair Work Ombudsman case, surpassing the previous record of $10.3 million against the Commonwealth Bank and CommSec in early 2024.
In addition to the financial penalties, Justice Katzmann ordered that the companies, now in liquidation, must back pay all workers in full. If the companies cannot meet these obligations, part of the penalty against the sole director, Yi Jeong ‘Rebecca’ Shin, will be used to rectify the underpayments.
The court’s decision underscores the Fair Work Ombudsman’s determination to crack down on worker exploitation in industries where vulnerable workers, particularly migrants, are often mistreated. The case also highlights the Ombudsman’s commitment to enforcing compliance, especially in sectors such as:
- aged care services
- agriculture
- building and construction
- disability support services
- fast food, restaurants and cafés
- large corporates
- universities
Justice Katzmann also recommended that Shin be referred to the Australian Taxation Office, the Department of Home Affairs, and the Australian Securities and Investments Commission for further investigation.
So what does this mean?
This landmark case serves as a warning to other employers: deliberate and repeated exploitation of workers will result in significant legal and financial repercussions, reinforcing the message that such behaviour is both unacceptable and economically irrational in Australia.
What about Wage Theft?
If this case had occurred and investigated in 2025 it might have been a very different story for the sole director.
Under the Fair Work Act 2009 (Cth), wage theft has been criminalised through the Fair Work Legislation Amendment (Closing Loopholes) Act 2023, which introduces a criminal offence for intentional underpayment of employees’ wages.
That is there are two elements to establish wage theft:
- absolute liability – there is an underpayment of wages or entitlements; and
- the underpayment is intentional.
So exemptions to this will include an honest mistake and small businesses will have the ability to utilise the Voluntary Small Business Wage Compliance Code.
Employers who intentionally engage in conduct that results in underpayment of their employees can face severe penalties, including:
- 3 times the amount of the underpayment
- Up to $7.825 Million for a company
- Up to $11.565 Million for an individual
- Up to 10 years imprisonment.
Tips for HR, Payroll and Employers
However as we have also seen accidental errors can also land an Employer in hot water. Tips to get ahead of this and avoid risk and liability:
- Boards, executives and management need to be educated on the underpayment of wages risks and understand the liability, this can be done through regular reporting, training and reviews of the financial and payroll functions especially processes and payroll technology
- Payroll teams, HR teams and financial teams education and training is integral especially a good understanding of the risks with errors and even if needed obtaining advice on award interpretation (as well as other industrial instruments) especially when it comes to classifications
- Seek legal advice when unsure on award classification and interpretation getting these right especially from the start is integral
- Payroll technology is amazing but ensure that any data inserted is correct. It is the responsibility of the Employer to ensure payment of wages is correct and although payroll technology is fantastic for automation and ease it has a particular weakness and that is, if something does go wrong, the automation can compound the problem. Regular audits of award coverage and classification is important.
- Review employment contracts and in particular any off set clauses, individual flexibility agreements, loadings and allowances payable to ensure they are fit for purpose and comply with any applicable modern award or other industrial instrument.
Our Employment Lawyers at South Geldard Lawyers have essential expertise in preventing these issues occurring in the first place and helping with the legal issues when they do occur. Feel free to reach out on 07 4936 9100 or via email to Jonathan Mamaril, Director at jmamaril@southgeldard.com.au.
All Employers receive an obligation free consultation.
