Bubble tea giant Chatime has been ordered to pay over $120,000 in fines after the Australian division of the company was found to have underpaid its workers, some earning as little as $7.59 an hour for preparing hot and cold takeaway beverages. The penalties were imposed by the Federal Circuit and Family Court, concluding a lengthy investigation initiated by the Fair Work Ombudsman.
Chatime, a majority Taiwanese-owned enterprise, faced scrutiny following media reports in 2019 that highlighted systemic wage theft within its Australian operations. The Fair Work Ombudsman launched an investigation shortly thereafter, alleging that Chatime Australia Pty Ltd and its managing director, Chen ‘Charlley’ Zhao, had been underpaying employees across various stores in Melbourne and Sydney. Many of these workers were international students from China and Taiwan who feared deportation if they reported their underpayment due to visa restrictions.
“The large number of vulnerable employees underpaid in this matter was concerning,” stated Fair Work Ombudsman Anna Booth. “We treat cases involving underpayment of junior workers and visa holders particularly seriously.” Booth emphasized that it is unacceptable for franchisors of Chatime’s size to neglect their responsibility to ensure compliance with labor laws.
The Fair Work investigation revealed that between August and December 2016, employees at 19 Chatime locations were paid flat rates ranging from $7.59 to $24.30 per hour. The company was also accused of failing to provide entitlements mandated by the Fast Food Industry Award, including penalty rates and casual loading. In total, 152 employees—comprising 41 junior workers under the age of 21 and 95 visa holders—were found to have been underpaid a staggering $162,533 during the five-month audit period.
Despite Chatime’s legal team arguing that the wage theft was not significant—claiming it amounted to just over $1,000 per employee—the court disagreed. It noted that some individuals experienced underpayments exceeding $2,300 during the same period.
As a result of these findings, Mr. Zhao has been fined $11,880, while Chatime Australia must pay $120,960 in penalties. Workplace lawyer Allison Shannon described the outcome as a “good result” for the Fair Work Ombudsman, highlighting that the penalties imposed are substantial enough to deter smaller employers and franchisors from similar violations in the future.
Shannon remarked, “Franchisors can’t simply stick their heads in the sand; they should be taking proactive measures to ensure their franchisees are compliant with labor laws.”
In response to the court’s decision, Mr. Zhao provided a statement acknowledging and accepting the findings. This case serves as a stark reminder of the ongoing challenges related to worker exploitation within Australia’s labor market, where issues like wage theft and outdated enterprise agreements persist.
The ruling against Chatime underscores the importance of compliance with labor regulations and highlights the vulnerabilities faced by workers in the fast-food industry. As more consumers become aware of these practices, it is crucial for companies to prioritize fair treatment of their employees to maintain their reputations and foster trust within their communities.
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