The Chatime wage underpayment saga is just one in a long list of scandals — and that is a sad indictment of our system

Mon 28 Aug 2023
ABC News

Bubble tea giant Chatime and its managing director will be bracing for the tone and size of penalties ordered by the Federal Circuit Court later this week, as wage theft and other forms of worker exploitation continue to engulf the nation.

The orders will land the day before Anna Booth takes over as the new head of the workplace regulator, the Fair Work Ombudsman, amid a slowing economy and mounting pressure on companies to keep a lid on costs including wages.

Whether it is wage theft, outdated enterprise agreements, or traineeships subsidised by the government, an ominous cloud has hung over the country's labour force for years.

In some cases, worker underpayment has been blamed on a payroll error or failures in administration. In recent years, it has embroiled some of the country's most well-known organisations, including Woolworths, Qantas, and the ABC, to name a few.

But in too many cases, employers have been allowed to build empires on the backs of worker exploitation. Some organisations are mercilessly exploiting some of the country's most vulnerable workers.

Underpayment is rife   
In any month the Fair Work Ombudsman's website is littered with legal actions and enforceable undertakings or fines for businesses underpaying workers.   

In the past week alone, it has taken legal action against a daycare centre in Newcastle, the former operators of a greengrocer in Melbourne's east, a cafe in Sydney's inner west, secured a penalty in court against the former operator of a vehicle repair and detailing business in Adelaide, secured $72,800 in penalties in court against the operators of an Italian restaurant in Melbourne, and a $13,786 penalty in court against the operator of a Melbourne-based bricklaying company.

Exploited and underpaid
When migrant workers get exploited, all Australians pay the price with potentially lower wages.


Read more
Indeed in a recent speech, Kristen Hannah, the acting Fair Work Ombudsman, revealed that last year the regulator received more than 14,000 anonymous reports of workplace compliance issues — a 12 per cent increase on the year before.

She said Fair Work clawed back more than $500 million in underpayment to 250,000 workers, compared with $532 million the previous year, with university payments continuing to comprise a large amount of the recoveries.

"Over the last year, we have accepted more Enforceable Undertakings including from David Jones, Politix, Crown Melbourne and Perth, Suncorp, RSL Life Care Limited, Uniting AgeWell, and Apollo Health. We also commenced litigation against Super Retail Group and its subsidiaries Super Cheap Auto, Rebel Sport, SRG Leisure Retail (BCF and Ray's Outdoors), and Macpac Retail," she said.

But many of the underpayment scandals aren't self-reported and workers are too scared to speak up.   

Hospitality workers bearing the brunt
Some of the more egregious misconduct occurs in hospitality and the $1.8 billion franchise sector, which includes a lot of overseas workers on visas.

Over the past decade, a litany of wage fraud scandals have come to light including universities, high-profile restaurants, convenience store giant 7-Eleven, pizza chain Domino's, Grill'd and Retail Food Group, which operates brands including Brumby's, Michel's Patisserie, and Gloria Jeans.


Some of the more egregious misconduct occurs in the hospitality industry.
Those scandals sparked a parliamentary inquiry that exposed brutal business models, financial devastation, suicides and rampant underpayment issues.

Chatime — a majority-owned Taiwanese company — was exposed in the media back in 2019, when it was revealed that its franchisees and corporate stores were underpaying workers, most of them foreign students on visas from China and Taiwan, too afraid to speak up for fear of being deported because they had breached their visa conditions and worked extra hours per week to survive on the small hourly wage rate.

Fair Work subsequently took action in a landmark case against Chatime and a senior official. It also went after some individual Chatime franchisees.


Targeting those at the top
Until then, most cases involving the franchise industry historically targeted individual franchisees, with head office getting off virtually unscathed.

More lately the regulator has started to use franchisor liability provisions in the Fair Work Act to allege in court that a franchisor is legally liable for unlawful conduct of a franchisee.