A Sydney cafe has been fined $475,200 for significantly underpaying eight employees with pay rates as low as $6 an hour.
85 Degrees Coffee Australia was slapped with the penalty in the Federal Court after collectively underpaying the staff members by $429,393 between July 1, 2016, and 26 June, 2017.
The eight female Taiwanese students, aged between 20 and 22, worked at 85 Degrees cafes or factories as part of an “internship” organised between their university in Taiwan and the parent company of 85 Degrees. They were paid as little as $1650 a month – only about 30 per cent of their lawful entitlements.
With staff working as many as 70 hours per week, it equates to a wage of about $6 per hour.
Four of the students worked at the company’s cake factory in St Peters, two worked at its bread factory in Hurstville, one worked at the 85 Degrees Cafe in Sydney’s CBD while another worked at both the St Peters factory and an 85 Degrees Cafe in Hurstville.
After the Fair Work Ombudsman [FWO] launched legal action against the company, 85 Degrees contacted the employees and paid each of them their outstanding entitlements – an average of $54,000.
“The underpayments were objectively large, with the smallest underpayment being more than a full-time employee would ordinarily earn in a single year on the highest classification under either award,” Justice Robert Bromwich found.
Outstanding superannuation payments weren’t made until more than a year later, in March 2022.
85 Degrees requested a lesser penalty of $416,880, however Justice Bromwich handed down the penalty at the top of range suggested by the Fair Work Ombudsman of $475,200. It is the second-biggest penalty of its kind against a single company.
Not intentional and deliberate, company claims
The company said the arrangement with the interns was “not intentionally and deliberately exploitative”, however Justice Bromwich failed to see how that was the case.
“ It is clear that the conduct was deliberate as opposed to inadvertent, and carried out in contravention of enforceable undertakings. Its most senior management must have been aware, or at least plainly should have been aware, that Australian law applied to the employment here. The end result was undoubtedly exploitative, and the contravening conduct itself was plainly deliberate,” he said.
"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."
85 Degrees no longer runs any retail stores, just one factory which supplies products to other retail outlets.
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