Key points
- The 85 Degrees cafe brand has been ordered to pay a $475,200 penalty for exploiting young Taiwanese students.
- The students had come to Australia to work as interns, and were underpaid between $50,213 and $58,248 each.
- It is the fifth-highest penalty ever secured in a Fair Work case.
A café brand in Australia has been ordered to pay a $475,200 penalty for deliberately exploiting young Taiwanese students in Sydney under the guise of a purported internship arrangement.
It is the fifth-highest overall penalty ever secured in a Fair Work Ombudsman (FWO) case, and the FWO’s second-largest court penalty against a single company.
The Federal Court imposed the penalty after 85 Degrees Coffee Australia Pty Ltd admitted breaching Australian workplace laws by underpaying eight Taiwanese students $429,393 between July 2016 and June 2017.
The students, who were aged between 20 and 22 and had difficulties with English, came to Australia on working-holiday visas under an 'internship' arrangement.
Through the ‘internship’, 85 Degrees paid the students between $1,650 to $1,750 per month for performing up to 60 to 70 hours of work per week in its factories and retail stores in Sydney.
Each student was underpaid between $50,213 and $58,248 over a period of just under 12 months. 85 Degrees back-paid the workers only after the Fair Work Ombudsman started legal action in 2021.
Justice Robert Bromwich found the underpayments by 85 Degrees were deliberate.
“Its most senior management must have been aware, or at least plainly should have been aware, that Australian law applied to the employment here," Justice Bromwich said.
"The end result was undoubtedly exploitative, and the contravening conduct itself was plainly deliberate,” Justice Bromwich said.
Fair Work Ombudsman Sandra Parker said any employer in Australia that deliberately underpays visa holders will face serious consequences.
“The substantial penalty sends a clear message that the exploitative conduct we have seen in this matter will not be tolerated in any Australian workplace,” Ms Parker said.
“Employers must pay the lawful minimum pay rates that apply to all employees, for all hours worked, regardless of a worker’s nationality or visa status.”
85 Degrees also breached provisions of the Fair Work Act relating to issuing pay slips, record-keeping and providing Fair Work Information Statements.
The students were entitled to be paid the minimum rates and entitlements under the applicable Awards, including minimum wage rates, overtime rates, penalty rates, annual leave entitlements and superannuation.
The Fair Work Ombudsman investigated the matter after receiving requests for assistance from the students.
Justice Bromwich rejected submissions from 85 Degrees that the students were not especially vulnerable under the internship.
“I am unable to accept that the intern Employees were anything other than highly susceptible to exploitation in the sense of being in no realistic position to resist being overworked and underpaid,” Justice Bromwich said.
“The long hours that were not paid for by overtime or penalty rates, longer than other employees, exacerbated the poor living conditions and general amenity brought about by not being able to pay for suitable accommodation.”
In 2015, 85 Degrees entered into an Enforceable Undertaking with the FWO after underpaying other visa holders.
