A Korean restaurant franchise says it advertised for staff for about $12 an hour because it feared retribution from competitors if it offered award wages.

Chris Guon, the owner of the restaurant, claimed that flat hourly rates of $12 to $16 were “normal” for casual employees at Korean restaurants throughout the Sydney metropolitan region.

Guon told the Fair Work Ombudsman of pressure from the Korean business community to recruit workers at below-award wages.

He said he feared that businesses which did not conform were fearful of payback, such as having false claims made to local councils about food hygiene standards.

Guon’s franchise business – 678 Korean BBQ chain in Pitt Street, Sydney – came to the attention of the Fair Work Ombudsman after two Korean nationals claimed the restaurant had underpaid them.

Fair Work inspectors subsequently identified that the two accused the franchise business had short changed them over $1300 in penalty rates.

Guon disputed the claims of the disgruntled workers but according to the Fair Work Ombudsman he was unable to verify his argument, due to poor record-keeping practices. He also failed to issue employees with payslips.

Under the Restaurant Industry Award 2010, the two employees were entitled to a normal hourly rate of $21.59 and up to $39 overtime, weekend, evening and holiday shifts.

Fair Work inspectors found that Guon had advertised pay rates of $12 to $16 an hour in language-of-origin Korean websites.

Fair Work Obmudsman Natalie James says the EU was considered the most appropriate enforcement outcome to focus on behavioural change.

James said that a Community Engagement Officer as part of a pilot program aimed at developing relationships with multicultural communities, to ensure migrant workers and overseas workers are aware of their rights and responsibilities under Australian workplace laws.

“The use of Community Engagement Officers is in addition to our Overseas Worker’s Team established in July, 2012 and they have been selected for their ability to work sensitively with multi-cultural groups and have been trained in techniques that will assist them to establish meaningful ongoing relationships.

“Through consultation with community legal and migrant resource centres, ethnic community networks and international student organisations, the Fair Work Ombudsman can determine how to best assist migrant and international student groups,” James said.