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Almost $300,000 penalty for restaurant owner-operators and company

The operators of an inner Sydney restaurant who relied on informal market research to set their wage rates have been penalised almost $300,000 for deliberately short-changing their employees and using false records to try to disguise the underpayments.

Handing down the penalties this morning, Federal Circuit Court Judge Justin Smith found that the Mamak Malaysian restaurant on Goulburn Street Haymarket had deliberately ignored its workplace obligations "in order to maximise profit".

"That approach, of course, was taken at the cost of the employees, who, in reality, funded the success of the business," Judge Smith said at the conclusion of legal proceedings initiated by the Fair Work Ombudsman.

The Fair Work Ombudsman took legal action after an investigation revealed that six employees - five of them visa-holders at the time from non-English speaking backgrounds - were collectively underpaid more than $87,000 when they received as little as $11 an hour between February, 2012 and April, 2015.

Restaurant owner-operators Joon Hoe Lee, Julian Lee and Alan Wing-Keung Au have been penalised $36,992, $35,360 and $35,360 respectively.

Their company Mamak Pty Ltd has been penalised a further $184,960.

Judge Smith said the penalties should deter other employers from similar conduct. 

He found that the underpayments stemmed from informal market research by the restaurant operators to see what other restaurants were paying their staff.

"They discovered that there were three approaches - the first were the star-rated restaurants which paid according to the Award, the second were medium restaurants that followed the Award half the time and the third included small restaurants that just paid illegal rates," Judge Smith Said.

"Mamak took the third approach.

"The fact that there are many restaurants in the industry that do not comply with their legal obligations does not exculpate the respondents in any way. In my view, it does the opposite.

"The point here is that all of the respondents knew that there was an Award but deliberately chose to ignore it in order to maximise profit.

"That approach, of course, was taken at the cost of the employees, who in reality, funded the success of the business.

"Although they have now been repaid the amounts that they were owed, Mamak and the other respondents in turn had the benefit of that money over a number of years."

Judge Smith said the fact that the underpaid employees did not complain to the restaurant about their wages and agreed to work under the conditions they were offered did not mitigate against the seriousness of the contraventions.

"Not only did the respondents know that the employees were being paid less than their legal entitlements, but they also knew that their records were not kept in accordance with the law."

In addition to the financial penalties, Judge Smith ordered Mamak Pty Ltd to commission a qualified professional to audit pay practices across all of its restaurants next year and to rectify any underpayments identified.

The audit - for the period from March to December 2016 - will cover the Haymarket restaurant, as well as Mamak Malaysian restaurants at Chatswood in Sydney and the Melbourne CBD, and a factory at Marrickville, in Sydney, where food is prepared

Source: Fair Work Obudsman Media Release 19/8/2016