The Federal Court has ruled a New South Wales restaurateur significantly underpaid two international workers in a major contravention of the Fair Work Act.

Indian national Midhun Basi and Pakistani national Syed Haider sued Vaisakh Usha and his company, Namitha Nakul Pty Ltd, claiming breaches of the Act.

The men, both 35, claimed they were owed more than $200,000 in unpaid wages while working as chefs at Mr Usha's Adythia Kerala restaurants in Wollongong and Nowra between 2016 and 2018.

In handing down his preliminary judgement on Tuesday, Justice John Halley ruled in favour of the employees.

"Mr Usha denied their complaints repeatedly, sought to have Mr Haider provide backdated time sheets and make a statement containing incorrect representations and made fallacious claims about loans to attempt to cover up and avoid the consequences of the contraventions.

"Further, the respondents failed to keep records relating to the conduct that gave rise to the contraventions.

"There should be judgement for each of Mr Basi and Mr Haider against the respondents for the full amount of the underpayment under the Award of their wages plus tax."

Work hours claim rejected

During the proceedings, Mr Basi gave evidence that he was forced to work about 70 hours a week, often without a break.

Justice Halley rejected the claim, in part due to a lack of accurate employment records provided by both parties.

"It was not possible to conclude on the balance of probabilities that the applicants had worked overtime hours or had worked for more than five hours on any given day without a break."

Mr Basi also told the court he was paid $1,711 a fortnight but was asked to pay back $511 to Mr Usha to cover the cost of his 457 visa.

Mr Usha told the court that the money he requested from Mr Basi was to repay loans to him, but Justice Halley did not accept the claim.

He said the demand for the money amounted to "a serious contravention" of the Fair Work Act upon which Mr Usha was "knowingly involved".

'Undue pressure'

During the hearing, the men gave evidence that their employment and visa sponsorship was threatened on multiple occasions, if they did not comply with Mr Usha's demands.

"I am satisfied that statements were made by Mr Usha to Mr Basi that he would "lose his job" or "lose everything", and that they were threats of dismissal," Justice Halley said.

"I am also satisfied that the statements also involved the application of undue influence or undue pressure on Mr Basi for him to accept Mr Usha effectively deducting monies from his salary," he said.

In making his judgement, Justice Halley said he had taken into consideration the difficulty of conducting the proceedings via Microsoft Teams, and with the assistance of an interpreter.

Sums to be calculated

Principal of WorkLawyers, Kristian Bolwell, who ran the men's legal case pro-bono with barrister Lisa Doust, said he was pleased with the outcome.

"This employer will shortly have to go to court again to argue why they shouldn't have to pay maximum penalties of $126,000 for Mr Usha and $630,000 for his company [Namitha Nakul]."

Defence solicitor Brian Gillard said he was taking the time to consider the lengthy, 93-page judgement in detail.

The matter will return to court in July to consider compensation calculations, penalties, and costs before a final judgement will be delivered.