Operator fined $200k in racial discrimination case

28 May, 2018 by
Hospitality Magazine

The Fair Work Ombudsman’s first racial discrimination litigation has resulted in penalties of $211,104 against the former operators of a Tasmanian hotel after they deliberately exploited two Malaysian employees of Chinese descent who worked in the hotel’s restaurant.

NSW man Chang Yen Chang, who owned and operated the Scamander Beach Resort Hotel until 2014, has been penalised $35,099 in the Federal Circuit Court. His company, Yenida Pty Ltd, has been penalised a further $176,005.

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The Fair Work Ombudsman successfully proved in court that Chang and his company breached the racial discrimination provisions of the Fair Work Act by treating the two Malaysian employees, who are husband-and-wife, differently to Australian staff by underpaying them a total of more than $28,000, requiring them to work extra hours and failing to record their hours of work.

The Malaysian husband was recruited through an advertisement in a Malaysian newspaper in 2007 and Chang’s company sponsored him on a 457 skilled worker visa to work as head chef in the hotel’s restaurant until 2014.

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The husband was required to work six days per week, working a total of between 33 and 57 hours over the course of a week, often starting work when the restaurant opened for lunch and finishing after it closed for dinner.

Between 2010 and 2014, he was paid an annual salary of $45,240 to $46,280, which was not sufficient to cover the penalty rates he was entitled to for weekend, public holiday, evening and overtime work, resulting in a total underpayment of $20,550.

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The man’s wife was on a spousal visa and was employed as a kitchen-hand in the restaurant between September 2009 and January 2010. She was required to work between 35 and 51 hours per week and was paid a flat rate of between $446 and $594 per week – only about half of what she was entitled to – leading to an underpayment of $8775 over a period of just four months.

At a four-day contested hearing last year regarding the discrimination contraventions, the Fair Work Ombudsman presented evidence to establish that the husband-and-wife’s Malaysian national extraction and Chinese race was a “substantial and operative reason” Chang and his company had discriminated against them.

Fair Work alleged that in the context of the Chinese cultural connection Chang shared with the couple, he had referred to them as “family” to put pressure on them to work hard for him.

Chang claimed this was not the case but Judge Barbara Baker said she did not accept Chang’s denials.

Judge Baker said Chang and his company “made a deliberate decision to treat [the Malaysian couple] differently to other employees”.

She found that Chang “decided to recruit employees from Malaysia, in part because he knew a Malaysian would accept working six days a week and he knew that it was usual in Malaysia to work six or seven days”.

In contrast to the treatment of the Malaysian couple, Chang and his company required Australian employees to work five or fewer days per week and paid them minimum hourly rates, penalty rates and loadings, largely in accordance with the Hospitality Industry (General) Award 2010.

However, the incorrect application of some provisions in the Award resulted in 15 Australian employees being underpaid a total of $26,488. The Malaysian couple and all Australian employees have been back-paid in full.

Fair Work Ombudsman Natalie James says this is the first time Fair Work has taken legal action against an employer for racially discriminating against employees.

“It is an uncomfortable truth that racial discrimination is a driver behind some of the exploitation of migrant workers in this country,” she says.

“The Court’s ruling in this matter sends a message that singling out migrant workers for exploitation is serious unlawful conduct and significant penalties apply. All workers in Australia are entitled to our minimum wages, irrespective of their background, language skills or visa status.

“Our success in this case is a warning to any employer tempted to make employment decisions based on race: the Fair Work Ombudsman can and will seek penalties for discrimination as well as pursuing any unpaid entitlements, and we will do so via court action if necessary.”

Image credit: ABC