The Fair Work Ombudsman has commenced legal action against the former operator of three sushi outlets in Newcastle for her alleged involvement in underpaying four overseas workers more than $33,000.

Lydia Chang operated Sushi Revolution outlets in the Newcastle suburbs of Waratah, Hamilton and Cooks Hill before her company, Sushi Revolution Pty Ltd, sold the business and went into liquidation in 2017.

Fair Work Ombudsman Inspectors audited Chang’s outlets in 2016 and found four employees, all Korean nationals in Australia on 417 working holiday visas, had been paid a flat rate for performing kitchen, customer service and other duties.

Chang was also allegedly involved in providing inspectors with false or misleading pay records for staff.

It is alleged that payment of the flat rate led to a significant underpayment of the minimum ordinary hourly rates, overtime rates and penalty rates. Allowances, superannuation and annual leave entitlements were allegedly also underpaid and hundreds of dollars in unlawful deductions were allegedly made from two of the employees’ wages.

The four employees were allegedly short-changed $33,226 over a period of nine months from January to September, 2016. The alleged underpayments have been rectified.

The Fair Work Ombudsman is seeking the imposition of penalties against Chang, who faces fines of up to $10,800 per contravention.

The matter is listed for a hearing in the Federal Circuit Court in Sydney on 15 August.

Fair Work Ombudsman Natalie James says businesses should be aware that under the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017, which came into effect in September last year, the maximum penalties for failing to keep employee records or issue pay slips have doubled to $63,000 for a company and $12,600 for an individual, and the maximum penalty for knowingly making or keeping false or misleading employee records has tripled to $12,600 for an individual.

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