Underpaying Staff Nearly $100,000: What SMEs Must Learn from This Sydney Restaurant Case

A recent case involving the underpayment of two Filipino workers at a Sydney restaurant serves as a cautionary tale for all SME owners, especially those employing migrant workers or managing shift-based teams.

The Fair Work Ombudsman (FWO) has launched legal action against Kosu Group Pty Ltd, the former operators of Yakiniku Kosu in Castle Hill, and its director, Sean Lee, after uncovering alleged wage theft totaling nearly $100,000.

What Happened?

According to the FWO:

• Two Filipino workers, a sous chef and a food & beverage attendant, brought to Australia on work visas were paid as little as one-third of what they were lawfully entitled to.
  
• They worked up to 128 hours per fortnight, including nights, weekends, public holidays, and split shifts, but were paid flat rates of $800 and $1,200 (net) per fortnight.
  
• This led to alleged underpayments of $57,927.95 and $39,693.48, respectively.
  
• Kosu Group also allegedly falsified time sheets and pay slips during the investigation to cover up the non-compliance.
  

The Risks for Employers

The Fair Work Ombudsman is now seeking financial penalties:

• Up to $33,300 per breach for the company
  
• Up to $6,660 per breach for the director, Sean Lee
  

These penalties come on top of the obligation to repay all underpaid wages (which, in this case, have already been rectified).

Key Lessons for SMEs

Whether you run a restaurant, retail store, cleaning business, or any SME employing shift workers, this case is a strong reminder of your legal obligations:

1. Flat Rates Aren’t a Free Pass

Paying staff a flat weekly or fortnightly rate without calculating the correct award entitlements (including overtime, penalty rates, and allowances) is a fast track to non-compliance.

• Always refer to the relevant Modern Award or Enterprise Agreement to calculate pay correctly.

2. Migrant Workers Have Full Workplace Rights

Visa holders are entitled to the same pay and conditions as any other worker. Exploiting their vulnerability, intentionally or otherwise, is viewed seriously by regulators.

• Don’t assume visa status changes your obligations. It doesn’t.

3. Falsifying Records Makes Things Worse

Inaccurate or misleading payslips and timesheets aren’t just bad practice — they’re illegal. Attempting to cover up underpayments only adds to the legal exposure.

• Use a reliable digital system to track hours and automate payslips, and audit your records regularly.

4. Working Long Hours? Overtime Applies

The employees in this case worked up to 128 hours per fortnight. That’s well above the standard and should have triggered overtime and penalty rates.

• Ensure rosters comply with hours-of-work limits, and if staff work excess hours, they must be compensated correctly.

5. Get Help Before Mistakes Escalate

The investigation started because the workers sought help. In many cases, employees raise issues only after they’ve left, often leading to back payments, penalties, and reputational damage.

• Regularly review your payroll processes with a qualified advisor to ensure full compliance.

A Word from the Fair Work Ombudsman

Anna Booth, the Fair Work Ombudsman, said:

“Allegedly paying workers only about one-third of their total owed wages will not be tolerated… Migrant workers have the same workplace rights as all others.”

She also reinforced that compliance in restaurants, cafés, and fast food is a top priority, especially when it comes to vulnerable workers.

Final Thought for Business Owners

No business, big or small, is exempt from Fair Work obligations. If you’re unsure whether your payroll setup is compliant, especially when it comes to award coverage, overtime, or visa workers, now is the time to get it checked.

Taking shortcuts with pay may seem like a saving, but it’s a risk no SME can afford.