Sushi outlet and accountant cop massive penalty after exploiting young, foreign workers

YET another illegal internship scheme has been exposed — this time involving a South Coast sushi joint.

The Korean workers were underpaid a combined total of $51,025. Picture: Richard Gosling

A NSW sushi outlet and the company’s accountant have been fined almost $200,000 over an illegal internship program.

The Federal Circuit Court handed down a staggering penalty of $161,760 against Kjoo Pty Ltd, which operated the Masaki sushi outlet at the Stockland Shellharbour Shopping Centre on the NSW south coast.

Three young, foreign workers were exploited under the program between September 2014 and July 2015.

The Korean women, aged in their early 20s, spoke little English and were underpaid a combined total of $51,025.

The workers came to Australia under 417 working holiday visas and all three studied at the Busan Institute of Science and Technology, a private Korean college which had an “internship agreement” with Kjoo.

The women came to Australia under the guise of “work experience” and were paid between $12 and $13.50 an hour in cash.

They each worked for more than 38 hours per week, and deductions were also taken out of their wages for accommodation.

The so-called internship agreement between the college and Kjoo was not authorised under Australian law, which meant the workers should have been classified as employees and entitled to a minimum wage under the Fast Food Industry Award 2010.

The company’s manager and part owner Hyo Jun “John” Kwon, who was described by Judge Philip Dowdy as the “architect” of the exploitation, was also fined $32,352.

The company’s accountant Ok Gyu Lim, director of accountancy firm Hanlim, copped a $4608 fine for preparing false records.

Judge Dowdy found that Kwon knew the workers were entitled to minimum hourly rates of between $16.67 and $18.99 plus casual loadings, and penalty rates ranging from $23 to $47 an hour.

An investigation was launched after the Fair Work Ombudsman was contacted by the workers, and after the agency issued a Notice to Produce records, Mr Lim created false pay records to cover the company’s tracks.

Judge Philip Dowdy said there was a “deliberate, intentional and informed decision by Kjoo, through Mr Kwon, to underpay the employees to gain a financial advantage for its business”.

He described the attempted cover-up as “the highest level of dishonesty” and that Mr Lim’s conduct “merits the most serious condemnation”.

While the underpayments have since been rectified, Fair Work Ombudsman Natalie James said she hoped the hefty fines would act as a deterrent for other businesses which might be tempted to exploit internship programs as a source of cheap labour.

“My agency has no tolerance for those who deliberately target the vulnerabilities of young workers, especially migrant workers, for their own financial gain,” Ms James said.

“The law prohibits the exploitation of workers by characterising them as ‘interns’ or as doing ‘work experience’ when those individuals are fulfilling the role of an employee. Such workers must be paid minimum employee entitlements.

“This decision is also another reminder for professional advisers that they will be held responsible for their part in workplace contraventions — claiming you were just following a client’s orders is no excuse.”

The Fair Work Ombudsman has referred Mr Lim’s conduct to the Tax Practitioners’ Board and the Institute of Professional Accountants.

News.com.au attempted to contact Kjoo Pty Ltd, but the company’s phone number has been disconnected.

A Hanlim staff member said she was not authorised to comment on the case when contacted by news.com.au.

Unfortunately, unlawful internships are nothing new in Australia.

Earlier this week news.com.au reported on Brisbane labour hire company Workforce Solutions, which will face court after allegedly ripping off workers by more than $14,000 through an illegal unpaid work experience program.

Last year, the Fair Work Ombudsman began court action against fashion industry start-up Her Fashion Box, a former Shark Tank winner, for allegedly running an unlawful unpaid internship program and underpaying three workers more than $40,000.

And in 2016, a Sydney media company was ordered to pay $272,850 in penalties over unpaid internships.

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