FCCA Imposes Penalties for Underpayment: Fair Work Ombudsman v Panol DC [2021] FCCA 373

Thursday 11 March 2021 @ 3.11 p.m. | Industrial Law | Legal Research

The Fair Work Ombudsman (“FWO”) has been successful in the Federal Circuit Court, securing penalties against a former Chatime bubble tea franchisee in Sydney that underpaid 17 workers through its unlawfully low flat rates of payment in Fair Work Ombudsman v Panol DC Pty Ltd & Ors [2021] FCCA 373 (2 March 2021).

The FWO originally commenced the proceedings on 1 April 2019 alleging that Panol DC had contravened the Fair Work Act 2009 (“the Act”) by failing to pay employees minimum weekly wages, casual loading, public holiday entitlements and special clothing allowances, as prescribed by the Fast Food Industry Award 2010 (the “Award”).


A media release issued by the FWO reveals that:

"[b]etween January and November 2017, employees at Chatime Cinema City (Sydney) were generally paid flat rates of between $13 to $18.55 per hour, which resulted in underpayment of the ordinary hourly rates, casual loadings and a special clothing allowance they were entitled to under the Award. Public holiday penalty rates were also underpaid."

Nine of the underpaid workers were visa holders, mostly international students, while eight of the employees were junior workers aged 20 or younger when they were underpaid. The FWO said that underpayments totalling $46,372 have now been rectified.

The company and Mr Panol also admitted to breaching record-keeping laws under section 535(2) of the Fair Work Act 2009 (Cth) (the “Act”) and regulation 3.33 of the Fair Work Regulations 2009 (Cth).

The Penalties

The Court imposed a $41,600 penalty against Panol DC Pty Ltd, which formerly operated the Chatime Cinema City outlet on George Street, Sydney. The company’s directors, Leiden Emmanuel Panol and Carlo Benjamin Dela Cruz, were also penalised $9,600 and $6,600 respectively.

Mr Dela Cruz’s full penalty and $6,600 of Mr Panol’s penalty are suspended for three years and will then be discharged without requiring payment if they do not breach the Act in that time.

The Judgment

In handing down his judgment, Judge Cameron said at [para 126]:

“… there is a need to communicate to employers a no-tolerance policy of underpayment and record-keeping contraventions, particularly as that industry employs a vulnerable workforce of visa holders. I also accept the Ombudsman’s further submission that there are significant levels of non-compliance within the franchise sector …”

Commenting on the penalties handed down to the directors, his Honour noted at [para 133]:

“ … I am also of the view that the penalties imposed on Messrs Panol and Dela Cruz for the underpayment contraventions in which they were involved should be suspended and potentially set aside after three years. I have reached this conclusion because these were their first contraventions of the FW Act, they have left the fast food industry and are unlikely to return to it …”

Panol DC Pty Ltd sold its franchise back to the Australian franchisor of Chatime in January 2019.

Comment and Reaction from the FWO

Fair Work Ombudsman Sandra Parker said the significant penalties sent a message to franchise outlets about paying their employees’ lawful entitlements:

“It is never acceptable to set pay rates that breach employees’ minimum rights, and we continue to prioritise enforcement of the law among fast food outlets and established and emerging franchise chains, who we know often employ vulnerable young workers and visa holders. All franchise outlets are on notice that they must pay staff lawful minimum pay rates and franchisors should take responsibility for ensuring that their franchisees comply with the law …”

FWO Support for Migrant Workers and Visa Holders

The FWO has an agreement with the Department of Home Affairs that allows migrant workers and visa holders (including international students), to seek help without fear of their visa being cancelled, with the FWO also noting that an “employer can't cancel your visa, even if it's been breached. Only the Department of Home Affairs can grant, refuse or cancel visas”.

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Former Chatime franchisee and directors penalised – Fair Work Ombudsman Media Release (4 March 2021)

Fair Work Ombudsman v Panol DC Pty Ltd & Ors [2021] FCCA 373 (2 March 2021)

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