Gloria Jeans franchisees fined $110,000 for underpaying international students

THE owner-operators of the Gloria Jeans franchise at Caulfield have been dealt a hefty fine for underpaying 22 young international students more than $83,000 in wages. Hieu Chau reports.

Owner-operators of the Gloria Jeans franchise in Caulfield are facing fines of more than $110,000 for paying young international students as little as $8 an hour.

Many of the 22 underpaid casual employees were international students from non-English speaking backgrounds, a third of them aged under 21.

The students were owed sums ranging from $219 to $17,103 each between July 2011 and April 2013, totalling $83,566.

The students were back-paid only after the fair Work Ombudsman commenced legal proceedings following investigations resulting from a complaint by an employee.

The cafe franchise was also found to have breached workplace laws relating to the issuing of pay slips, providing meal breaks and keeping employment records.

The Federal Circuit Court fined Tsinman Fu and Ping Ostrovskih $17,500 and $13,000 respectively, and imposed a further $80,000 penalty against their company Primeage Pty Ltd.

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In his judgment on the case, Judge Grant Riethmuller noted that inspectors had previously found that another company operated by Fu and Ostrovskih had underpaid an employee’s entitlements.

Judge Riethmuller said that previous conduct would have ensured Fu and Ostrovskih were “well aware of their obligations and the seriousness of those obligations” – and their failure to implement a proper pay system showed “at best a reckless disregard of the obligations”.

The Court found Fu’s actions with respect to the underpayments were deliberate, observing that a “conscious decision was made to reduce wages when the business was not producing a sufficient income.”

Judge Riethmuller said the impact on the employees had been significant and general deterrence was important, with the restaurant and hospitality industry having been recognised as “notorious for non-compliance”.

The Court dismissed submissions from Fu and Ostrovskih that the employees did not express any dissatisfaction in relation to their entitlements prior to the Fair Work Ombudsman’s intervention.

“It is common for employees, particularly in industries where pay rates are low and workforces are largely casual, to be wary of expressing any dissatisfaction for fear that their employment will not continue,” Judge Riethmuller said.

Related story: Stop student exploitation – Know your work rights

Fair Work Ombudsman Natalie James said the Agency made repeated requests for the employer to back-pay the employees before commencing legal action.

Ms James said the Court’s decision sends a message to others that blatantly underpaying minimum entitlements is a serious matter and will not be tolerated.

“We treat underpayments of young and overseas workers particularly seriously because they can be vulnerable if they are not fully aware of their workplace rights or are reluctant to complain,” she said.

“Successful litigations such as this also benefit employers who are complying with workplace laws, because it helps them to compete on a level playing field.”

A similar case was reported in Sydney by Fairfax just last month, with some students saying they received $10 an hour for working at various Chinese, Thai, Korean and Turkish restaurants, others saying they received $9 an hour and knew of others who were earning $8 an hour.

An Italian student told Fairfax she was working at a coffee shop and a restaurant for more than 70 hours each week, in addition to the 20 hours she spends in class.

“What can I do? I have to work,” she said. “I know it’s illegal but I cannot work less [than 20 hours a week]. I would not survive.”

Council of International Students Australia (CISA) president, Thomson Ch’ng expressed concern over the matter of workplace exploitation.

“It is too common to the point where everyone thinks it is okay,” Mr Ch’ng said.

“The government and industry are encouraging more and more international students to come to Australia and that makes the situation worse because the demand for jobs is going up but there is little supply out there. That leads to the point where students are willing to engage in this environment,” Mr Ch’ng said.