$395,000 In Penalties Alone against an owner and manager.
$802,000!
Bubble Tea “Cashbacks”.
False Records.
And Migrant Workers Underpaid At Adelaide Eateries.
Another Fair Work Ombudsman prosecution has landed with serious consequences for an employer.
This time, the Federal Court of Australia imposed penalties of $395,000 against the managers of two Vietnamese eateries in Adelaide in Fair Work Ombudsman v Mai [2025] FCA 421.
And the facts alleged by the Fair Work Ombudsman read like a checklist of what not to do in payroll and workplace compliance.
What happened?
According to the Fair Work Ombudsman, the managers underpaid migrant workers employed at two Adelaide food businesses.
A restaurant in James Place and a stall in the Market Plaza One Stop Shopping Centre which employed at least 36 employees.
The contraventions went well beyond simple payroll mistakes.
The Court found breaches involving:
- Failure to make and keep employee records
- Failing to issue payslips unless requested to do so
- Failure to issue compliant pay slips
- Knowingly making false or misleading records
- Providing false or misleading information to the Fair Work Ombudsman
- Underpayments for ordinary hours, weekends and public holidays some as low as $15 an hour
- Failure to properly pay casual loading
- “Cashback” style arrangements requiring workers to spend or repay money in the restaurant or stall
- Workers allegedly being forced to buy bubble tea from their employers during shifts
The Fair Work Ombudsman ultimately secured more than $802,000 in combined penalties and compensation orders.
But the $395,000 penalty figure alone against the two managers individually is enough to get the attention of every employer, payroll team and HR professional. Technically the first respondent was the owner and the second respondent was a business manager.
Why this case matters
Cases like this are exactly why payroll compliance is now one of the biggest workplace law risks facing Australian businesses.
In particular after the commencement of the new criminal wage theft laws from 1 January 2025.
The reality is this:
The Fair Work Ombudsman is no longer treating payroll contraventions as “administrative oversights”.
Where there are allegations of:
- false records,
- sham pay slips,
- cashback arrangements,
- vulnerable workers,
- or migrant workers on visas,
the regulator is increasingly pursuing litigation and seeking substantial penalties.
And the numbers are climbing fast.
This is no longer an area where employers can afford to “hope the payroll system got it right”.
The migrant worker factor
Another important aspect of this case is the focus on migrant workers.
The Fair Work Ombudsman has repeatedly identified visa holders and migrant workers as an enforcement priority.
Why?
Because these workers are often:
- less likely to complain,
- unfamiliar with Australian workplace laws,
- financially dependent on employment,
- and vulnerable to pressure from employers.
The regulator and Courts are clearly treating exploitation of migrant workers as an aggravating factor when penalties are assessed.
That significantly increases risk exposure for employers.
The payroll lesson for employers
Payroll compliance is far more technical than many realise and with automation and payroll software programs, errors compound.
The real risk areas often include:
- incorrect weekend or public holiday rates,
- unpaid overtime,
- casual loading errors,
- flat rate arrangements,
- salary set-off problems,
- time recording failures,
- and poor record keeping.
And when records are inaccurate or incomplete?
The problem escalates quickly.
In many Fair Work Ombudsman prosecutions, poor records do not just create evidentiary problems.
They become separate contraventions attracting separate penalties.
That is exactly what employers are seeing in modern wage litigation.
The broader warning for HR and payroll teams
This decision is another reminder that payroll compliance is no longer just a finance function.
It is:
- an HR risk,
- a governance risk,
- a leadership risk,
- and increasingly, a reputational risk.
For HR teams, payroll officers and executives, the key question is no longer:
“Could we have an underpayment issue?”
It is probably:
“If the Fair Work Ombudsman audited us tomorrow, how confident are we in our systems, records and processes?”
Once regulators start alleging false records, misleading pay slips or deliberate conduct, penalties can escalate very quickly.
The enforcement environment is only getting tougher.
Our Workplace 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 via email to Jonathan Mamaril, Director at jmamaril@southgeldard.com.au. All Employers receive an obligation free consultation.
