Zhao was presented with an alternative model, named “costing model B”, proposing to pay minimum ordinary hourly rates but not penalty rates, overtime or casual loading, which would cost the business an additional $254,258 a year. Zhao instructed Chen to implement this model.
Manousaridis rejected Chatime’s submission that it was “unfair” to characterise the contraventions as “serious” or “substantial”.
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“The contraventions came about through ignorance and inattention by those who managed Chatime’s business,” he stated in his judgment.
The bubble tea chain received a 20 per cent “discount” on its penalties for admitting to and rectifying underpayments in a timely manner. This was not extended to Zhao, whose involvement in some of the contraventions led to underpayments of around $73,000.
“Unlike Chatime, Mr Zhao did not admit his involvement in any of the contraventions, and for that reason, it would not be open to extend to him any discount for having admitted his involvement in any of the contraventions,” Judge Manousaridis said.
A spokesperson for Chatime Australia said it was pleased Judge Manousaridis had handed down his decision and that the business’ most valuable assets were its people.
“At Chatime we see our employees as family and recognise they are the key to our success,” the spokesperson said.
“We strive to be an employer of choice and uphold our values of being a fair, open and transparent business playing by the rules and being a good corporate citizen.
“We recognise that underpayments are a serious issue impacting the franchise industry (indeed the community at large) and we have made and will continue to make significant improvement in people capabilities (internal and external), business/payroll systems, compliance, training, and education to ensure full compliance at all times.”
Fair Work Ombudsman Anna Booth said the conduct in this matter by a franchisor of Chatime’s size was “completely unacceptable” and that the number of vulnerable underpaid workers was concerning.
“We expect franchisors to not only pay their own staff correctly but to take responsibility for ensuring that their franchisees comply with the law,” she said.
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