Top Sydney restaurant chain Mamak has been fined $300,000 for deliberately underpaying workers

Mamak Haymarket. Source: Facebook

The Malaysian street food eatery Mamak is routinely lauded as one of Sydney’s best value restaurants, with long queues of diners outside the Chinatown branch in the evenings.

But the Federal Court has found that the workers themselves were paying the price for the cheap eats, penalising the company and three of its directors nearly $300,000 for deliberately short-changing employees and using false records to disguise the underpayments.

The Fair Work Ombudsman took legal action against the business, which also has outlets in Chatswood and Melbourne, in January after discovering six employees – five were visa-holders from non-English speaking backgrounds – were collectively underpaid more than $87,000, earning as little as $11 an hour between February, 2012 and April, 2015.

Judge Justin Smith found Mamak on Goulburn Street, Haymarket, conducted informal market research into pay rates on the black market and deliberately underpaid staff to maximise profit.

He fined restaurant owners Joon Hoe Lee, Julian Lee and Alan Wing-Keung Au $36,992, $35,360 and $35,360 respectively and their company Mamak Pty Ltd was penalised a further $184,960.

The severity of the penalties, close to the maximum under the law, included the fact that false records were given to Fair Work Inspectors in a bid to hide the underpayments.

“Not only did the respondents know that the employees were being paid less than their legal entitlements, but they also knew that their records were not kept in accordance with the law,” Judge Smith said, adding that he wanted the severity of the penalties to act as a deterrent for other employers.

“The point here is that all of the respondents knew that there was an Award but deliberately chose to ignore it in order to maximise profit,” he said.

“That approach, of course, was taken at the cost of the employees, who in reality, funded the success of the business.”

The workers have been repaid the money they were owed.

Judge Smith also found that the underpayments were the result of checking with other restaurant operators to see what they were paying staff.

“They discovered that there were three approaches – the first were the star-rated restaurants which paid according to the Award, the second were medium restaurants that followed the Award half the time and the third included small restaurants that just paid illegal rates,” he said.

Mamak took the third approach, the judge found.

“The fact that there are many restaurants in the industry that do not comply with their legal obligations does not exculpate the respondents in any way. In my view, it does the opposite,” he said.

Smith also ordered Mamak Pty Ltd to commission an audit of its wages bill between March to December 2016 at the Haymarket restaurant, as well as the Chatswood, Sydney, and the Melbourne CBD outlets, plus the factory in inner Sydney where food is prepared.

Fair Work Ombudsman Natalie James said that the demonstrated the harm caused when a businesses provides false records to disguise the deliberate underpayment of staff.

“Researching ‘black market’ wage rates in an industry is not the way to determine how to pay your staff,” she said.

“Minimum wage rates apply to everyone in Australia – including visa-holders – and they are not negotiable.”

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.