Chatime Australia Fined Over $120,000 for Underpaying Workers as Little as $7.59 an Hour
Chatime, the popular bubble tea brand, has been fined over $120,000 after being caught underpaying workers at its Australian locations. The case, which involved workers being paid as low as $7.59 an hour, has raised concerns about worker exploitation and wage theft, particularly among vulnerable employees such as international students.
The Underpayment Scandal: What Happened?
Chatime Australia has been slapped with penalties after the Federal Circuit and Family Court found that it underpaid a significant number of employees at its stores across Melbourne and Sydney. The case stems from a long-running investigation by the Fair Work Ombudsman, which revealed that the company’s workers were paid as little as $7.59 per hour for their work, far below Australia’s minimum wage.
This scandal has drawn attention to the exploitation of vulnerable workers, including international students on visas, who were often afraid to speak up for fear of losing their jobs or facing deportation.
The Impact on Workers: Who Was Affected?
The underpayment affected 152 workers at 19 Chatime stores, with many of the victims being junior workers aged under 21, and 95 workers holding temporary visas. These employees were often paid flat hourly rates that ranged from $7.59 to $24.30—far below the required wages under the Fast Food Industry Award, which includes higher rates for weekends and other penalties.
In total, these workers were underpaid by $162,533 between August and December 2016 alone. The exploitation was particularly concerning, as many of the affected employees were already vulnerable due to their temporary visa status.
How Did This Happen?
The underpayments were uncovered after audits were conducted on Chatime’s Australian stores between August and December 2016. The company was found to have failed to pay its workers the proper penalty rates, casual loading, and other entitlements required under Australian workplace laws. In fact, Chatime Australia had deliberately adopted a payment structure that did not include crucial allowances, leaving workers shortchanged.
The court found that Chatime’s managing director, Chen “Charlley” Zhao, had been aware of the issue but had ignored warnings about the underpayment. In 2013, he was presented with two options for employee pay structures, one of which would have ensured employees were paid correctly, but he chose the cheaper option that excluded necessary entitlements.
The Penalties: A Warning to Employers
As a result of the underpayment scandal, Chatime Australia was fined $120,960, while its managing director, Zhao, was personally fined $11,880. This penalty aims to hold both the company and Zhao accountable for the wage theft and send a strong message to other businesses about the importance of complying with workplace laws.
The court emphasized that the underpayments were not a minor issue. In fact, the largest underpayment was more than $2,300 for a single employee over the five-month period. The company’s attempt to downplay the seriousness of the issue was rejected by the court, which called out the severity of the wage theft.
Chatime’s Response: Acknowledging the Mistake
In response to the ruling, Chatime Australia issued a statement acknowledging the court’s findings. The company expressed regret over the situation and emphasized its commitment to treating employees fairly. In the statement, Chatime said: “At Chatime we see our employees as family and recognize they are the key to our success.”
Chatime has pledged to improve its payroll systems, compliance processes, and employee training to prevent future underpayments. The company also assured that it is taking steps to ensure full compliance with workplace laws moving forward.
The Bigger Picture: Workplace Exploitation in Australia
This case shines a light on the broader issue of workplace exploitation in Australia, especially in the fast-food and franchising sectors. The underpayment of workers—especially vulnerable groups such as international students and young workers—remains a significant problem.
Workplace lawyer Allison Shannon described the fine as a “good outcome” for the Fair Work Ombudsman, noting that the penalties imposed were substantial and would likely deter other employers from similar misconduct. She emphasized that franchisors have a responsibility not only for their own business practices but also for ensuring that their franchisees are compliant with the law.
Moving Forward: A Call for Better Practices
The Chatime case serves as a reminder of the importance of fair pay and the need for companies to take responsibility for their workers’ rights. Fair Work Ombudsman Anna Booth highlighted that the agency takes cases involving underpayment seriously, especially when junior workers and visa holders are involved.
She also warned that franchisors, like Chatime, must ensure that their franchisees follow the law and treat employees fairly. The penalties in this case may serve as a deterrent to other businesses in the industry, encouraging them to be more vigilant about wage compliance and employee treatment.
Conclusion: A Step Towards Fairer Workplaces
While the fines imposed on Chatime and Zhao are significant, the true victory lies in the message this case sends to employers: worker exploitation will not be tolerated. The penalties, which are almost equal to the amount owed to the employees, underscore the seriousness of the underpayments and the need for businesses to operate with integrity.
For Chatime, it’s a turning point—a chance to rebuild trust with its workers and ensure that such mistakes are never repeated. The company’s commitment to improving its systems and processes will be crucial in safeguarding the rights of its employees moving forward.
