Coffee Club franchisee in Court over 457 visa fraud

A Coffee Club café franchisee in Brisbane allegedly coerced an overseas worker to repay $18,000 of his wages by threatening to cancel his 457 skilled worker visa if he didn’t do so.  The accusations come amid the Turnbull Government’s proposed changes to the 457 visas which are common in Australia’s cooking profession.

Summary

A Coffee Club franchisee in the Nundah Village Shopping Centre in Brisbane is facing Court for allegedly threatening to cancel an employee’s 457 skilled worker visa unless he repaid $18,000 of his wages.

In fear of losing his position, the employee immediately withdrew the $18,000 cash.

Furthermore, despite the employee being entitled to a minimum annual salary of $53,000 stipulated under 457 visa rules, the employee was allegedly grossly underpaid. In total, the employee was allegedly underpaid by $23,546 between 2013 and 2015.

After investigation by the Fair Work Ombudsman, it was found that the worker, an Indian man in his late 20s sponsored on a 457 visa to work as a chef at the café, had been continually underpaid in his minimum hourly rates, casual leave, annual leave entitlements, overtime rates, weekend and public holiday rates. Also, he received no payment in lieu of notice of termination.

The Fair Work Ombudsman has said in a media release that these ‘cashback’ schemes are being increasingly used by companies to disguise underpaying employees and to exploit employees on skilled worker visas who may be desperate for work.

 What laws has the Brisbane Coffee Club franchisee breached?

The unlawful cash back payment of an employee’s wages and the underpayment of the employee’s salary entitlements is in breach of the fair workplace provisions under the Fair Work Act 2009 (Cth).

Furthermore, the employer breached its obligations as a sponsor under the provisions of the Employer Sanctions legislation which prohibit employing a worker in breach of his visa conditions. It is a condition of the 457 visa that the employee be paid at or above the guaranteed salary approved by the Department of Immigration. In this case, the employee was required to be paid the minimum salary of $53,900.

 What are the implications of this breach?

The franchise business is liable to repay restitution to the employee for unpaid wages and is facing Court for a determination on penalties. The company can face a maximum of $54,000 per breach.

In addition to the franchisee’s liability, Mr Saandeep Chokhani and his wife’s company are facing Court for a decision on the penalties against the owners and managers of the business. Mr Chokhani faces a penalty of up to $10,800 per breach and the wife’s company Guara Nitai Pty Ltd which was the sponsor of the employee may face up to $54,000 per breach of the fair work provisions and $81,000 per breach of the Migration Amendment (Reform of Employer Sanctions) Act 2013.

The company will also be banned from future sponsorships due to the adverse finding that they have breached the law.

 What can your business learn from this?

This case is a timely reminder of the importance of ensuring workers are paid in accordance with Australian modern awards and legislation AND in accordance with the terms and conditions of the employee’s visa.

Employers can be held liable for breaches under both employment laws and immigration laws and penalties can be substantial for both a company and its directors, officers and decision-makers.

A range of self-education activities has recently been published by the Fair Work Ombudsman to assist employers with self-managed compliance. These resources can be found in the Online Learning Centre at https://www.fairwork.gov.au/how-we-will-help/online-training.

If you are unsure whether you are compliant with workplace and immigration laws, we can assist with a workplace assessment in order to identify and rectify any issues. Employers should be aware that migrant workers are entitled to the same pay and work conditions as Australian employees and visa holders must be employed in accordance with their visa conditions.

Contact us on info@themigrationagency.com.au for assistance.

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