The Fair Work Ombudsman has secured a $475,200 penalty in court against the operator of the 85 Degrees café brand in Australia for exploiting young Taiwanese students in Sydney under the guise of a purported internship arrangement.
The Federal Court has imposed the penalty against 85 Degrees Coffee Australia Pty Ltd (’85 Degrees’), an Australian company which operates factories and cafes under the 85 Degrees brand in Sydney.
The penalty was imposed after 85 Degrees admitted breaching Australian workplace laws by underpaying eight Taiwanese students $429,393 between July 2016 and June 2017. 85 Degrees has the same parent company as the Taiwan-based company that organised for the students to come to Australia as interns.
It is the fifth highest overall penalty ever secured in a Fair Work Ombudsman case, and the FWO’s second largest court penalty against a single company.
The students were aged between 20 and 22 at the time of work, and had difficulties with English. The purported internship involved 85 Degrees paying the students between $1,650 to $1,750 per month for performing up to 60 to 70 hours of work per week in its factories and retail stores in Sydney.
Each of the students was underpaid between $50,213 and $58,248 over a period of just under 12 months. 85 Degrees back-paid the workers only after the Fair Work Ombudsman commenced legal action in 2021.
Fair Work Ombudsman Sandra Parker said any employer in Australia that deliberately underpays visa holders will face serious consequences.
“The substantial penalty sends a clear message that the exploitative conduct we have seen in this matter will not be tolerated in any Australian workplace,” Ms Parker said.
“Employers must pay the lawful minimum pay rates that apply to all employees, for all hours worked, regardless of a worker’s nationality or visa status.”
“Any workers with concerns about their pay or entitlements should contact us.”
85 Degrees also breached provisions of the Fair Work Act relating to issuing pay slips, record-keeping and providing Fair Work Information Statements.
The Fair Work Ombudsman investigated the matter after receiving requests for assistance from the students.
They were students at the Taipei City University of Science and Technology in Taiwan and came to Australia on working-holiday visas under an ‘internship’ arrangement between the University and the Taiwan-based Comestibles Master Co Ltd, an associated entity of 85 Degrees that shares the same parent company.
Four students worked at an 85 Degrees cake factory in St Peters preparing and packing cakes and cleaning; two worked at the 85 Degrees bread factory in Hurstville preparing and packing bread products; one worked across the St Peters factory and the 85 Degrees café outlet in Hurstville and one worked at the 85 Degrees café outlet on George Street in the Sydney CBD.
The students were entitled to be paid the minimum rates and entitlements under the applicable Awards, including minimum wage rates, overtime rates, penalty rates, annual leave entitlements and superannuation.
Justice Robert Bromwich found that the underpayments by 85 Degrees were deliberate.
“Its most senior management must have been aware, or at least plainly should have been aware, that Australian law applied to the employment here. The end result was undoubtedly exploitative, and the contravening conduct itself was plainly deliberate,” Justice Bromwich said.
Justice Bromwich rejected submissions from 85 Degrees that the students were not especially vulnerable under the internship.
“I am unable to accept that the intern Employees were anything other than highly susceptible to exploitation in the sense of being in no realistic position to resist being overworked and underpaid,” Justice Bromwich said.
“The long hours that were not paid for by overtime or penalty rates, longer than other employees, exacerbated the poor living conditions and general amenity brought about by not being able to pay for suitable accommodation.”
Justice Bromwich said the penalties should deter other employers from similar conduct.
The contraventions occurred despite 85 Degrees having entered into an Enforceable Undertaking with the Fair Work Ombudsman in 2015 after it underpaid other visa holders.
