Chatime facing allegations of rampant underpayment

Bubble tea chain Chatime is the subject of the latest underpayment scandal, after an in-depth report in The Age and The Sydney Morning Herald alleged rampant underpayment in both corporate-owned stores and the franchisee network stretching back to 2009.

Employees of the Taiwanese company’s Australian subsidiary – Infinite Plus – are owed more than $10 million, according to the report. Many of the underpaid workers are foreign students on visas from China and Taiwan, who were too afraid to complain to authorities, the report said.

A spokesperson for the Fair Work Ombudsman (FWO) told Inside Retail it has a current investigation relating to Infinite Plus, so could not comment further on the matter at this stage.

The report comes after a parliamentary inquiry earlier this year called for a total overhaul of the franchise sector, after a series of underpayment scandals at 7-Eleven, Retail Food Group, Domino’s Pizza Enterprises Ltd and other franchise businesses.

Chatime had not previously been insinuated in the underpayment scandals, but according to the report in The Age and The Sydney Morning Herald, the bubble tea business had in fact received a formal complaint from the Fair Work Ombudsman (FWO) in 2018, after an audit of its corporate-owned stores from August to December 2016 revealed 150 workers had been underpaid.

Chatime was told to back-pay workers an estimated $113,494 in NSW and $62,975 in Victoria, the report stated, but was not further penalised by the FWO. The Ombudsman also chose not to make the finding public.

Earlier this month, however, the regulator commenced legal action against a Chatime franchisee in Sydney, which it alleged underpaid 17 workers more than $46,000. A Chatime insider told The Age and The Sydney Morning Herald, “It’s pretty standard picking on the little guys, not the big guys”.

The spokesperson for the FWO told Inside Retail it is examining the rapid establishment and expansion of overseas franchise businesses.

“These businesses often implement operating models and workplace practices associated with their countries of origin,” the spokesperson said.

“In combination with employing migrant workers, who may be unaware of their rights, there is significant potential for non-compliance. We are proactively auditing several emerging franchisees in the fast food, restaurant and café sector to check compliance of their business models with Australia’s workplace laws.”

The spokesperson said recent litigations commenced against PappaRich and Chatime franchisee outlet operators are the result of this activity.

The spokesperson also confirmed that the FWO investigated Bakery Venture, a business that Infinite Plus’s key shareholders – Charlley Zhao and Iris Qian – were involved directors of and key shareholders, last year.

The Ombudsman secured $350,000 in back-pay for employees and former employees of Bakery Venture, trading as Dough Collective, but further enforcement options were limited, since the company went into liquidation during the investigation.

Inside Retail asked Chatime for comment, but had not received a reply by the time of publication.

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