All All Industry Insights Industry News Media Release Member Only Articles NRA Events NRA Legal NRA Partners NRA Projects NRA Training and Development Policy & Advocacy Policy Updates Technology Tenancy & Leasing Testimonials Thought Leaders Weekly CEO Update WHS Update

Coffee Club franchise fined for “grotesque exploitation” of visa worker

July 10, 2017

by Sid Sidhu and Troy Wild

Fair Work Ombudsman v Gaura Nitai Pty Ltd & Anor [2017] FCCA 1242

Another franchisee has been exposed by the Fair Work Ombudsman (the Ombudsman) for exploiting a migrant visa worker who was “desperate” to secure sponsorship. The Coffee Club cafe based in Brisbane has been fined more than $180,000, including a $30,000 fine on one of its two directors for breaches of the Restaurant Industry Award 2010.

The 457 skilled visa worker was an Indian national and was sponsored by Gaura Nitai Pty Ltd to work as a cook in the café. After being terminated without notice or payment of his accrued annual leave in November 2015, Mr Mathew sought assistance from the Fair Work Ombudsman, which subsequently launched an investigation into the matter.

Evidence was tendered by the employee that he was paid a flat rate, despite working at times which would ordinarily attract overtime or penalty rates under the modern award. During some pay periods, the employee was not paid at all and it was determined that a failure to pay Mr Mathew his entitlements amounted to a total of 109 breaches of the Fair Work Act 2010 (FWA).

After 18 months of service, the employee made a request for outstanding wages and it was agreed by both parties that the employer owed at least $19,334. That amount was transferred to the worker’s bank account. However, over dinner, Mr Mathew was told that he must withdraw this money and hand it back to his employer or else his sponsorship visa would be revoked. The Federal Circuit Court acknowledged that by this point, the employee was in a bind. “He could not leave his employment because if he did so he would breach a condition of his visa and his ability to remain in Australia would be seriously compromised. He was effectively working for nothing.”

In total, the employee was short-changed $23,546. According to Judge Jarrett, “the exploitation of workers from other countries who are inspired to live and work in Australia with the hope of achieving permanent residency needs to be discouraged in the strongest of terms.” By demanding repayment, the respondent contravened section 325 of the FWA and grotesquely exploited the power imbalance that existed between the parties.

Ultimately, the Court found that significant penalties were warranted given the deliberate underpayment contraventions, false and misleading records supplied to the employee, the demand to repay his wages to the employer and the strong need for deterrence.

The full decision can be found here.

What does this mean for your business?

Fair Work Ombudsman Natalie James has warned that “any unscrupulous employer tempted to engage in this sort of conduct should think again because there are serious consequences for this type of behaviour.” Under the proposed Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017, ‘cash back’ schemes such as the one in this case are expressly prohibited and will attract a higher penalty of up to $540,000 for corporations and $108,000 for individuals, if found to be deliberate and part of a systematic pattern of conduct. Liability may also extend to the franchisor and so it is extremely important to ensure that your employees are being paid correctly.

If you are considering employing migrant visa workers or would like to speak to somebody about this case, call the NRA today on 1800 RETAIL (1800 738 245).

NRA Media

  • National Retail Association strengthens support for members on leasing and tenancy
    June 01, 2021

    We are pleased to have strengthened our partnership with Lpc Cresa, a leading advisor to retail tenants across Australia and New Zealand, to assist our…

    Read More
    September 03, 2018

    To download the nomination form, click here

    Read More
  • Closing Loopholes Bill No. 2 passes Parliament 
    February 20, 2024

    Earlier this month, it was confirmed that both Houses of Parliament passed the second tranche of amendments to the Fair Work Act 2009 (Cth) under…

    Read More
  • Jump start your business for 2021 and step ahead of the competition
    November 20, 2020

    2020 has undoubtedly been one of the most challenging years for all of us. It has created unprecedented trends in every industry, and shown retailers…

    Read More
  • NRA members winners in new partnership with Aussie Broadband
    November 16, 2020

    You must be logged in to view this content.

    Read More

What our clients say

Want to chat?
Contact our team today!