Restaurant chain fined $4M for underpaying staff and falsifying records

The Australian Federal Court has fined popular dumpling restaurant Din Tai Fung and two of its managers AU$4 million for underpaying its workers and trying to cover up the violation.

Federal Court Justice Anna Katzmann ordered the former owners of the Taiwanese restaurant chain to pay$3.89 million. Meanwhile, its general manager, Hannah Handoko, and HR manager, Sinthiana Parmenas, have been ordered to pay $92,232 and $105,084, respectively.

The case was brought to court by the Fair Work Ombudsman on behalf of at least 17 workers at Din Tai Fung’s Sydney and Melbourne branches. The supposed violations occurred from July 2014 to June 2018.

However, Justice Katzmann believes the extent of the misconduct on the part of the former owners could be greater, with the majority of the violations happening between 2017 and 2018.

During the proceedings, it was revealed that the range of underpayments was between $2,300 and $50,000.

Not only did Din Tai Fung allegedly refuse to pay its workers the minimum award rates, but it also purportedly required some staff members to work more than 38 hours a week on several occasions, according to Justice Katzmann.

The restaurant also reportedly forced some employees to work every week of the year. However, it purportedly failed to pay staff for weekend work, public holiday rates, split shift allowances, and casual loadings.

In 2020, the former owners of Din Tai Fung sold the restaurant to another company after being forced to go into liquidation.

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Covering up the violations

The federal court learned that the management of Din Tai Fung had purposely created two sets of records for workers. One of the sets showed the real wages and hours paid to staff, while the other showed “false payslips, timesheets, payroll journals, and pay run summaries”.

It was also revealed that the restaurant had hired visa holders, not Australian citizens, to hide the infractions from the government. One employee accused a manager of telling them that the hiring strategy was to keep the workers from “reporting us to [sic] Gov department”.

In 2017, Din Tai Fung reported 338 out of its 382 staff members were “foreign employees”, according to documents submitted by the restaurant to the Department of Immigration and Border Protection.

Justice Katzmann said many of the restaurant’s migrant workers were under 30.

"All of these employees are fairly characterised as vulnerable," Katzmann said. "It goes without saying that the respondents' conduct was extremely serious."

The court described the actions of the former restaurant owners as “calculated” for misleading authorities while also robbing their workers of their “hard-earned wages”.

The Din Tai Fung management supposedly continued its underpayments and unlawful practices even after the Fair Work Ombudsman had launched its investigation into the workers’ accusations.

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Irregular payments of staff

During the presentation of evidence, Justice Katzmann noted the irregularity in the amount of money paid to Din Tai Fung staff. She found it “highly unlikely” that the restaurant’s HR manager would only receive $49,580 while the general manager earned $70,665 in 2018, an amount she believed was less than what the cooks were paid.

Justice Katzmann also questioned why the taxable income for the restaurant’s general manager was only $7,037 in 2022 before dropping to just $82 in 2023.

“The ASIC searches show that, as of 25 August 2023, neither woman held any shares in any Australian companies,” the justice said.

“I have no confidence, however, that this information provides a true or complete picture of their current financial circumstances.”