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Federal Court imposes near-record penalty after FWO pursues company exploiting Taipei students.
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Sydney cafe outfit fined $475k for ripping off Taiwanese ‘interns’
08 November 2022
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A Sydney cafe operator has been hit with a $475,200 penalty — the fifth-largest secured in a Fair Work case — for exploiting Taiwanese students under the guise of a purported internship arrangement.
The Federal Court imposed the penalty on 85 Degrees Coffee Australia after it admitted underpaying eight Taiwanese students a total of $429,393 between July 2016 and June 2017.
The supposed internships involved 85 Degrees paying the students $1,650 to $1,750 per month for 60-70 hours of work per week in its factories and retail stores.
The students aged 20–22 had limited English and were each underpaid between $50,213 and $58,248 over a period of just under 12 months.
In the Federal Court Justice Robert Bromwich found the underpayments by 85 Degrees were deliberate and the penalties — the fifth highest secured in an FWO case and its second largest against a single company – should be a deterrent.
“Its most senior management must have been aware, or at least plainly should have been aware, that Australian law applied to the employment here,” he said. “The end result was undoubtedly exploitative, and the contravening conduct itself was plainly deliberate.”
Justice Bromwich rejected submissions from 85 Degrees that the students were not especially vulnerable under the internship.
“I am unable to accept that the intern employees were anything other than highly susceptible to exploitation in the sense of being in no realistic position to resist being overworked and underpaid.
“The long hours that were not paid for by overtime or penalty rates, longer than other employees, exacerbated the poor living conditions and general amenity brought about by not being able to pay for suitable accommodation.”
The students, from Taipei City University of Science and Technology, came to Australia on working-holiday visas under an arrangement between the university and the Taiwan-based Comestibles Master Co Ltd, an associated entity of 85 Degrees that shares the same parent company.
Four students worked at an 85 Degrees cake factory in St Peters, two worked at the 85 Degrees bread factory in Hurstville, and two worked at the company’s cafes.
The students were entitled to be paid the minimum rates and entitlements under the applicable awards. The FWO began investigating after requests for assistance from the students, who were paid only after it commenced legal action in 2021.
The contraventions occurred despite 85 Degrees having entered into an Enforceable Undertaking with the FWO in 2015 following underpayments to other visa holders.
Fair Work Ombudsman Sandra Parker said the court had sent a warning to cheating employers.
“The substantial penalty sends a clear message that the exploitative conduct we have seen in this matter will not be tolerated in any Australian workplace,” Ms Parker said.
“Employers must pay the lawful minimum pay rates that apply to all employees, for all hours worked, regardless of a worker’s nationality or visa status.”
“Any workers with concerns about their pay or entitlements should contact us.”
The café company also breached provisions of the Fair Work Act relating to issuing pay slips, record-keeping and providing Fair Work Information Statements.
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