Hundreds and thousands of reasons why compliant payroll is essential

Yakiniku Kosu, a north-western Sydney Japanese restaurant, is before the courts, after the Fair Work Ombudsman (FWO) commenced legal action against its former operators, alleging they systematically underpaid two migrant workers and breached record-keeping and pay slip laws.

This case, which focuses on the alleged significant underpayment of two migrant workers from the Philippines, sheds light on critical issues regarding the treatment of vulnerable workers in Australia’s hospitality sector. Here, our experts unpack what happened and why payroll compliance is essential for every business, regardless of size or industry.

The $100k allegations: what happened

The FWO alleges that Kosu Group and its sole director Sean Lee underpaid two workers a total of $97,621 between May 2019 and September 2020. Both workers, young Filipino nationals, were recruited to Australia on visas and employed in roles as a food and beverage attendant and a sous chef. Over this period, the workers reportedly received only about one-third of the pay they were legally entitled to under the Restaurant Industry Award.

The food and beverage attendant, just 21 years old at the time, was allegedly underpaid $57,927.95, while the sous chef was shortchanged $39,693.48. These underpayments occurred due to unlawfully low flat pay rates, which disregarded critical entitlements such as:

• penalty rates for nights, weekends, and holidays,
• split-shift allowances; and
• overtime rates.

Adding to the severity of the case, Kosu Group is accused of falsifying employee records, providing misleading time and wages data to investigators, and failing to issue lawful pay slips. It is also alleged that Mr Lee was personally involved in the restaurant’s contraventions and the FWO is seeking penalties against him.

The restaurant, which has since permanently closed, is now at the centre of a case that reflects broader concerns about workplace compliance. A directions hearing is listed in the Federal Circuit and Family Court in Sydney on 16 September 2025.

Underpay your workers? The FWO says expect the consequences

This case is a timely reminder about the critical need for robust enforcement of workplace laws to protect vulnerable workers from exploitation. Migrant workers are particularly susceptible due to language barriers, visa conditions, and a lack of awareness of their rights. The FWO has reiterated that all workers, regardless of their immigration status, are entitled to fair treatment under Australian law.

Regular payroll audits prevent mistakes. Here’s how Citation HR’s expert services can help

It’s much less costly, less reputationally damaging, and more efficient to pay employees correctly than to rectify underpayments. Let us take care of the complicated stuff so you can get back to doing what you do best – running your business.

The team at Citation HR offers industry-leading payroll compliance services. If you’re not 100 per cent confident with your payroll processes or award/agreement interpretation, get in touch via our 24/7 HR Advice Line.

Not a Citation HR client? Need advice on managing underpayment risks? Citation HR can support your business on a range of workplace compliance matters. Contact us today to arrange a confidential, no-obligation chat.