Fair Work Ombudsman v Gaura Nitai Pty Ltd & Anor [2017] FCCA 1242: Former Coffee Club Franchisee Penalised over Exploitative Cashback Scheme

Thursday 22 June 2017 @ 10.45 a.m. | Industrial Law | Legal Research

In the case of Fair Work Ombudsman v Gaura Nitai Pty Ltd & Anor [2017] FCCA 1242 (13 June 2017), the Fair Work Ombudsman (the Ombudsman) has announced that it has recently secured more than $180,000 in penalties against a former Coffee Club café franchisee in Brisbane for contraventions including requiring an overseas worker on a 457 Skilled Worker Visa to pay back $18,000 of his wages through an unlawful cash-back payment.

Background to the Case

The penalties have been imposed after Brisbane man Saandeep Chokhani – who, with his wife, formerly owned and ran the Coffee Club franchise at the Nundah Village Shopping Centre – required an overseas worker to repay $18,000 of his wages by threatening to take steps to cancel the worker’s 457 Skilled Worker Visa if he refused. Mr Chokhani has been penalised $30,000 and a company he and his wife are the directors of, Gaura Nitai Pty Ltd, has been penalised a further $150,900, in the Federal Circuit Court. The worker is an Indian national in his late 20s who was sponsored by Gaura Nitai to work as a cook at the Nundah Coffee Club outlet on a 457 Visa.

The Judgment

In handing down his judgment, Judge Jarrett said at [para 1]:

“The exploitation of workers from other countries who are inspired to live and work in Australia with the hope of achieving permanent residency needs to be discouraged, in the strongest of terms whenever it is apparent that it has occurred. This is one of those cases.”

His Honour found that Chokhani then told the worker to withdraw $18,000 in cash and repay it to him, or Chokhani would take steps to cancel his 457 Visa. Fearing he would lose his Visa and therefore lose the ability to stay in Australia, the worker withdrew $18,000 in cash the same day and repaid it to Chokhani.

The worker’s contract stated he was to be paid an annual salary of $53,900 on a weekly basis - but he endured long periods without receiving any wages at all.

His Honour said at [para 44]:

“(The worker) was in a bind … He could not leave his employment because if he did so he would breach a condition of his visa and his ability to remain in Australia would be seriously compromised. He was effectively working for nothing.”

The Investigation

The worker lodged a request for assistance with the Fair Work Ombudsman only after his employment was terminated without notice in November 2015. When Fair Work Inspectors investigated, they found that because of the unlawful cash-back payment, the worker had been underpaid his minimum hourly rates, casual loading, annual leave entitlements, overtime rates, payment in lieu of notice of termination and penalty rates for weekend and public holiday work,  leading to the worker being short-changed a total of $23,546 between September, 2013 and November, 2015. The worker was back-paid in full earlier this year.

The worker told the Court that the exploitation had led to him incurring credit card debt and needing to borrow money from family and friends. Jarrett J described the requirement placed on the worker to pay-back his wages as “especially egregious”, saying at [para 70] it was:

“… an inappropriate and grotesque exploitation of the power imbalance that existed between (Chokhani) and (the worker)”.

And at [para 71]:

“The respondents’ conduct was deliberately exploitative of (the worker’s) position being, as he was, dependent upon (Gaura Nitai’s) ongoing sponsorship so as not to jeopardise his 457 visa.”

Comment from the Ombudsman

Fair Work Ombudsman Natalie James says the penalties imposed send a message about the seriousness of exploiting the vulnerability of visa holders:

“We will do everything within our power to pursue any employer who thinks they can exploit the power imbalance they have over migrant workers they employ. Any unscrupulous employer tempted to engage in this sort of conduct should think again because there are serious consequences for this type of behaviour.”

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Former Brisbane Coffee Club franchisee penalised over unlawful cash-back payment – Fair Work Media Release

Fair Work Ombudsman v Gaura Nitai Pty Ltd & Anor [2017] FCCA 1242 (13 June 2017)

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