$115,603 in penalties for former Coffee Club outlet operators

The two affected workers were paid flat rates as low as $15 per hour, which resulted in underpayment of the junior hourly rates, casual loadings, and weekend and public holiday penalty rates.

The Fair Work Ombudsman has secured a total of $115,603 in penalties in court against the former operators of a Coffee Club outlet in Victoria, after they deliberately underpaid two young workers and falsified records.

The Federal Circuit and Family Court has imposed a $96,336 penalty against JMSL Pty Ltd, the former franchisee of the Coffee Club outlet located in the Westfield Geelong shopping centre, and a $19,267 penalty against the company’s sole director, Edison Peng, also known as Congyou Peng.

The penalties were imposed after JMSL Pty Ltd and Mr Peng admitted breaching workplace laws by underpaying two workers a total of $15,412 between May 2016 and November 2018.

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The company and Mr Peng also admitted breaching record-keeping and pay slip laws, including making false time-and-wages records and providing them to the Fair Work Ombudsman knowing that they were false.

The two affected workers were paid flat rates as low as $15 per hour, which resulted in underpayment of the junior hourly rates, casual loadings, and weekend and public holiday penalty rates they were entitled to under the Restaurant Industry Award 2010.

JMSL Pty Ltd and Mr Peng back-paid the workers in full only after the Fair Work Ombudsman commenced legal action.

The breaches occurred despite the Fair Work Ombudsman having previously put Mr Peng on notice of his obligations under workplace laws during a prior underpayment investigation.

Fair Work Ombudsman Sandra Parker said employers need to be aware there are significant consequences for deliberately breaching workplace laws.

“Deliberate falsification of records and the payment of low, flat rates that undercut Award entitlements is completely unacceptable conduct. The exploitative conduct we have seen in this matter will not be tolerated in any Australian workplace,” Ms Parker said.

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“Employers also need to be aware that protecting vulnerable workers, like young workers, and enforcing compliance in the fast food, restaurant and cafe sector are enduring priorities for the FWO. Any employees with concerns about their pay or entitlements should contact us for free advice and assistance,” Ms Parker said.

The FWO investigated after receiving requests for assistance from the affected workers.

Fair Work Inspectors discovered that one of the workers, then aged 19 to 20, was underpaid $12,910 between May 2016 and August 2017 and the other, then aged 20, was underpaid $2,502 over a three-month period in 2018.

During the investigation, Mr Peng provided a total of 66 false and misleading records to Fair Work Inspectors that overstated the rates the two workers were paid.

In imposing the penalties, Judge Caroline Kirton found the workers had suffered “significant” loss, and that JMSL Pty Ltd and Mr Peng took “deliberate steps” to falsify records in an attempt to “conceal” the underpayments.

Judge Kirton noted that Mr Peng “persisted with this conduct” despite having received prior warnings from the FWO and found there was a need to deter Mr Peng and “others who might be tempted to contravene the Fair Work Act.”

“The deliberate provision of false information to a regulator is inexcusable and will be met with a strong penalty outcome,” Judge Kirton said.

It is the second time the Fair Work Ombudsman has taken legal action against a Coffee Club franchisee. In 2017, Fair Work Ombudsman secured more than $180,000 in penalties against a former Coffee Club café franchisee in Brisbane for contraventions including requiring an overseas worker to pay back $18,000 of his wages through an unlawful cash-back payment.

NOTE: The Coffee Club Café – Bay City Geelong now has new operators. The Fair Work Ombudsman makes no allegations against the current operators of the business.