The franchisee of two Subway outlets in Sydney is facing court for allegedly underpaying a Chinese worker more than $16,000.

After the worker lodged a request for assistance, Fair Work Ombudsman inspectors investigated and have now commenced legal action in the Federal Circuit Court against Danmin ‘Irene’ Zhang.

Zhang and her husband own Subway franchise outlets at Artarmon and Stanmore in Sydney. Their company, G & Z United Pty Ltd, is also facing court and faces penalties of up to $54,000 per contravention. Zhang faces penalties of up to $10,800 per contravention.

The Fair Work Ombudsman alleges a Chinese national was underpaid a total of $16,345 for work performed across the Artarmon and Stanmore Subway outlets between October 2014 and April 2016 — except for a four-month period where she returned to China.

The worker, a casual food and beverage attendant aged in her late 20s, was in Australia on a Skilled Nominated (subclass 190) visa at the time. The worker was back-paid in full earlier this year.

It is alleged that inspectors found she had been paid flat rates of $14 to $14.50 for all hours worked, leading to underpayment of her minimum hourly rates for ordinary hours, casual loadings and penalty rates for evening, weekend and public holiday work.

Under the Fast Food Industry Award 2010, she was entitled to receive minimum rates of more than $18, plus casual loading, for ordinary hours and penalty rates of up to $52.22 on public holidays.

A special clothing allowance was allegedly also underpaid, and laws relating to record-keeping, pay slips and requirements to inform employees about their terms of engagement and classification were allegedly contravened.

It is alleged the underpayment of the worker occurred despite Zhang having received summaries of applicable minimum Award wage rates from the Independent Purchasing Company Australasia, a company which works closely with the Subway franchisor to help ensure Subway franchisee outlets meet compliance and branding requirements.

It is alleged Zhang and her company deliberately undercut the wage rates by a significant amount despite the summaries provided by Independent Purchasing Company Australasia being displayed on the walls of the Artarmon and Stanmore Subway outlets.

Fair Work Ombudsman Natalie James says legal action has been commenced because of the alleged blatant exploitation of a vulnerable overseas worker.

James says exploitation of workers in franchises continues to be a concern for the Fair Work Ombudsman, and she welcomed the government’s proposed new laws relating to underpayments within franchise networks.

In April this year, James made a submission to a Senate Inquiry supporting the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017. James stated that the package of measures contained in the Bill will go some way to giving the Fair Work Ombudsman the tools to combat the most serious worker exploitation.

James says that in an environment where the public are demanding greater transparency and accountability by well-known franchise brands, it is crucial that franchise service networks are proactive in ensuring they have systems in place to promote and ensure compliance.

James says the Fair Work Ombudsman remains keen to work with businesses that want to make a commitment to compliance with workplace laws part of their brand.

“With the government proposing new laws to capture franchisors that fail to deal with exploitation of workers by their franchisees, the Fair Work Ombudsman’s door is always open,” said James. We are always willing to work with any franchise ready to take action to show it takes compliance with workplace laws throughout its network seriously.”

Fair Work Ombudsman Natalie James will speak at the Restaurant Leaders Summit on ‘Solving the Staffing Saga: 457, underpayments, retention’ on 31 July at the Randwick Racecourse.

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