The $4 million bill for intentional underpayments is still increasing

Let’s take a step back to last year when the Fair Work Ombudsman (FWO) secured a $4 million fine against the popular Taiwanese dumpling chain, Din Tai Fung, for deliberately underpaying staff and falsifying records. At the time, this case delivered the regulatory body’s second-highest penalties, and now, the FWO has added further financial repercussions for the restaurant and its operators.

This year, the personal toll of these violations has come to light, with a lawsuit awarding $62,000 to one of the 17 migrant workers affected. Together, the penalties and this recent legal outcome emphasise a critical message to all business owners: no matter how sophisticated the deception, the truth will surface, and accountability will follow.

Turn back the clock: recapping the details of the 2024 case

The FWO fined Din Tai Fung, World Square, $4 million for intentionally underpaying 17 employees by $157,025 and falsifying payroll records. The violations occurred between 2017 and 2018, with affected workers, many of whom were visa holders, being underpaid for overtime and receiving wages below award requirements. The company also provided fake records to inspectors to conceal the breaches. Alongside the company fines, former managers were penalised for their involvement in the misconduct. 

The case resulted in $197,316 in penalties being paid to FWO in 2024, which was distributed to the underpaid employees identified by the FWO. This included $50,588 in wages and $12,116 in interest awarded to one of the affected workers. Our experts covered this case in detail. Read about the underpayment case here.

The human impact of Din Tai Fung’s systematic underpayment: lawsuit results in $62,000 payday for visa holder

Guoyong “Jet” Liu, a former migrant worker at Din Tai Fung in Sydney, has received $62,704 in unpaid wages and interest following a landmark case against the restaurant chain. Jet’s testimony underscored the emotional and financial toll of exploitation, describing long, gruelling hours that left him unable to spend time with his family. The recovered amount allowed Jet to make significant economic strides, such as paying his mortgage, while the FWO reaffirmed its dedication to protecting migrant workers.

This case serves as a clear warning to employers about compliance with Australian workplace laws, emphasising the equal rights of all workers and the severe penalties for breaches. Employers are urged to maintain accurate records, ensure proper pay practices, and foster fair workplaces to avoid legal and reputational fallout.

Wage theft laws are now in place, and they will be enforced

Intentional wage and superannuation theft (wage theft) is now a federal criminal offence and has been incorporated into the Commonwealth Criminal Code (CC Code). Wage theft occurs when an employer deliberately withholds an employee’s minimum statutory entitlements under the Fair Work Act 2009 (Cth) or other industrial instruments like modern awards or enterprise agreements. Employers, including individual directors, could face penalties of up to 10 years in prison and fines of up to $7.8 million for such intentional misconduct.

What are the common mistakes made by employers that can lead to underpaying employees?

• Ignorance of specific changes to awards – such as transitional rates, minimum wage increases, and changes to penalty rates.
• Failing to properly implement changes to payroll rules when a new award term or enterprise agreement has come into operation.
• A lack of consideration as to whether a pattern of work is that of a shift worker or a day worker with regular overtime.
• Confusion as to which award or enterprise agreement applies.
• Employment contracts that are non-compliant with the award or enterprise agreement. For example, are penalties and overtime absorbed by a higher rate of pay, or are they separately payable?
• Rostering beyond the award or enterprise agreement span of hours to meet client needs, without properly satisfying the award or enterprise agreement facilitative provisions.

As you can see, intentionally underpaying your employees doesn’t just cost your business financially; it can severely damage your reputation, and under new laws, individuals can face jail time and huge penalties. While most business owners wouldn’t dream of intentionally committing wage theft, mistakes can and do happen – this is where we can help you. Citation HR can complete a thorough HR compliance audit of your business – and the best part –  this service is included in our monthly, cost-effective subscription, which is designed to protect your business from costly risks. If you’d like to explore how Citation HR can protect your business, contact our team here.