Kids store fined $5 million for exploiting workers

Giving evidence, the workers said their relationships suffered as they struggled to pay their mortgages, could not afford to take holidays and were not paid annual leave or superannuation.

When Zhang raised concerns with a Fair Work inspector, Gu threatened to dismiss her for cooperating with the regulator. Then he lied to inspectors about the ownership of a Canberra store and ordered it to close so Fair Work could not speak to employees.

The conduct of Gu and Yang was worsened by their flouting of employment laws despite years of warnings from Fair Work.

Justice Anna Katzmann said in her judgment there was no contrition and minimal corrective action by Blue Sky. Neither Gu nor Yang appeared at the hearings.

“The respondents’ contraventions were many and varied,” she said. “The nature of them is apparent from the declarations. They took place over a number of years. All of them were deliberate and all were serious.

“What is more, the contraventions occurred in circumstances in which the respondents either knew or were wilfully blind to their legal obligations.”

In 2021, after Fair Work had already commenced legal action against the company, another shop assistant, Kristen Ball, lodged a complaint with Fair Work that Blue Sky was failing to pay the minimum hourly rate, penalty rates and annual leave.

“This evidence suggests that, even while this proceeding was on foot, Mr Gu and Fei Yang were continuing to underpay staff,” Katzmann said.

Gu and Yang’s Blue Sky Kids Land Pty Ltd has since gone into liquidation, making it challenging for the regulator to recover the $4.2 million fine. But a new business, Starrays Tex Pty Ltd, is continuing to trade under the Blue Sky Kids Land brand with Gu and Yang as employees. Neither is a director of Starrays.

Gu, 63, also known as Nathan Gu and Yang, 61, also known as Fay Yang, were contacted for comment through Blue Sky.

Katzmann personally fined Gu $760,000 and Yang $43,000 for their roles in the business.

“Both were directors of the company, playing an active role in its management and operations and Fei Yang is as culpable as her husband for the contraventions in which they are both taken to have engaged,” she said.

Katzmann said the fines would “send a strong signal to the community that this kind of conduct is not an acceptable model for operating a business”.