Popular bubble tea chain Chatime allegedly underpaid its workers by almost $170,000 with the boss ‘intentionally choosing’ a business model of underpayment.
The Fair Work Ombudsman filed legal action against the tea franchise and managing director Chen ‘Charlley’ Zhao of paying 152 workers as little as $7.59 per hour at 10 outlets in Sydney and nine in Melbourne.
Zhao allegedly knew staff were underpaid dating back to 2013, The Australian Financial Review reported.
He was accused of having a ‘partial compliance’ business model with an award at less than a third of the cost.
Court documents showed former CFO Lawrence Chen told Mr Zhao and Chatime co-founder Iris Qian about the differences between what the business were paying staff and what they were entitled to.
It was alleged the business was giving staff cash payments as low as $9.42 at the time when the minimum hourly wage was $17.96 for permanent employees.
He told Zhao the company’s payments were illegal and said paying legal wages and including a uniform allowance and leave entitlements would cost the company $854,862 annually.
Mr Chen also allegedly gave an alternate proposal called ‘costing model B’ where employees were given hourly rates and a uniform allowance with no leave entitlements, penalty rates or overtime.
Mr Chen said costing model B was ‘partial compliance’.
The model was implemented in 2014.
Court documents revealed 42 underpaid workers were aged below 21 and 95 were were visa holders.
Fair Work Ombudsman Sandra Parker said improving compliance among franchises and franchisors is a priority.
‘In the fast food, restaurant and cafe sector where many vulnerable workers are employed, we will continue to take enforcement action when we find breaches of workplace laws.’
The Fair Work Ombudsman recovered a total of $731,648 in unpaid wages for 780 workers after a national investigation into emerging fast food, restaurant and cafe franchises.
Fair Work Inspectors audited franchises that have recently commenced operations in Australia – Chatime, GongCha, Hot Star Chicken, PappaRich, Sushi Izu, Nene Chicken and The Sushi 79.
Six of the seven emerging franchises were founded overseas – five in Asia and one in the USA.
By CHARLOTTE KARP FOR DAILY MAIL AUSTRALIA
Source: Daily Mail