The Exploitation of Vulnerable Migrant Workers by Din Tai Fung: A Cautionary Tale for Employers
In a recent decision by the Federal Court, Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 4) [2024] FCA 34, the Fair Work Ombudsman secured $4 million in court-ordered penalties against the former operators of a popular Taiwanese restaurant chain known as “Din Tai Fung”. This case highlights the importance of understanding casual employee rights in Australia, as it underscores the need for compliance with labour laws to protect vulnerable workers.
This marks the second-highest total amount penalties ever to be secured by the Fair Work Ombudsman (‘FWO’), underscoring not only the FWO’s hardline approach to protecting vulnerable workers from underpayment and exploitation, but also the Court’s readiness to hand down significant penalties to deter unscrupulous employers.
Overall, the decision serves as an important reminder for employers to comply with their obligations in relation to employee pay, entitlements and working conditions, as failing to do so, whether intentionally or not, may attract serious penalties.
“Serious Contraventions” of the Fair Work Act (Cth)
In delivering her judgment, Justice Katzmann found that Din Tai Fung committedmultiple “serious contraventions” of the Fair Work Act 2009 (Cth) (‘the FWA’), which was the very kind of conduct Parliament sought to deter as part of a set of reforms to the FWA in 2017.
Underpayment of Wages
It was found that Din Tai Fung deliberately and systematically underpaid 17 employees $157,025 under the Restaurant Industry Award 2010. This included withholding of entitlements in relation to minimum rates for ordinary hours, weekend penalty rates and overtime rates.
Unreasonable Work Hours
Din Tai Fung also required certain employees to work unreasonable hours. In one extreme case, an employee was required to work more than 38 hours a week for 98% of the weeks he worked over a period of nearly four years.
Falsification of Records in Relation to Employee Wages
In addition to the deliberate underpayment of employees, Din Tai Fung concealed its wrongdoing by falsifying employee records, including pay slips and time sheets, which it kept and provided to Fair Work inspectors.
Seriousness of Wrongdoing – Deceitful and Unscrupulous Exploitation of Vulnerable Migrant Workers
In determining the seriousness of Din Tai Fung’s conduct, Justice Katzmann placed considerable weight on the following factors:
- The conduct was not merely deliberate but also systematic, deceitful and unscrupulous;
- The employees were particularly vulnerable to exploitation, as they were mostly:
- Migrant workers, primarily from Indonesia or China;
- On temporary visas, including student and employer-sponsored visas; and
- Under 30 years of age.
Lessons for Employers
Employers must ensure they comply with their obligations under the FWA, specifically with respect to pay and work conditions, maintaining accurate employee records, and issuing accurate pay slips.
Deliberate contravention or recklessness as to whether such a contravention may occur constitutes a “serious contravention” of the FWA, which may attract significant penalties of up to 10 times more than that which would ordinarily apply.
Fair Work Inspectors are also empowered under a 2013 inter-agency Memorandum of Understanding with (the then precursor to) Home Affairs to attend on business sponsors to monitor compliance with certain enforceable sponsorship undertakings. Notably, this includes regulation 2.79 of the Migration Regulations 1994 requiring a sponsor to ensure its sponsored workers are engaged on no less favourable terms: ‘…than the terms and conditions of employment that are provided, or would be provided, to an Australian citizen or an Australian permanent resident…’.
Any employer who sponsors, (or otherwise employs) migrant workers must also understand the limitations on their workers’ visas and apply the principle of equal treatment under the law. This was a defining feature on DFT’s malfeasance in the case given the premeditated and systemic practice of employing and exploiting mainly temporary visa holders (constituting around 90% of the total workforce) in favour of local workers.
Understanding your Employees rights
Visa holders and migrant workers have the same workplace entitlements and protections as all other employees under the Fair Work system in Australia. Despite this, they are particularly susceptible to underpayment and exploitation by unscrupulous employers.
For legal advice and immediate support in relation to your obligations as an employer please call for an initial free consultation on (02) 8355 9999.
Our lawyers have comprehensive knowledge and experience in proceedings with the Fair Work Commission and proceedings in the Fair Work Division of the Federal Circuit and Family Court of Australia and Federal Court of Australia, especially regarding casual employee rights in Australia.
- Fair Work Ombudsman ‘$4 million penalties, second-highest ever secured, against former Taiwanese restaurant operators for “a calculated scheme to rob employees”’ (10 April 2024, Webpage, accessed online on 15 April 2024) <https://www.fairwork.gov.au/newsroom/media-releases/2024-media-releases/april-2024/20240410-dtf-world-square-penalty-media-release>.
- Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth); Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 4) [2024] FCA 341 at [29].
- Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 4) [2024] FCA 341 at [25]; FWA, s 45.
- Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 4) [2024] FCA 341 at [25]; FWA, ss 62 and 44.
- Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 4) [2024] FCA 341 at [25]-[26].
- Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 4) [2024] FCA 341 at [25].
- Fair Work Ombudsman v DTF World Square Pty Ltd (in liq) (No 4) [2024] FCA 341 at [28], [33]-[39].
- Fair Work Act (Cth), s 557A(a).
Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to change. You should seek independent legal advice before embarking upon any course of action.
