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California Fitness

Former California Fitness director fined for failing to pay Hong Kong staff

Wong Ping-kuen admitted he defaulted on HK$1.14 million in salary payments last year despite attempt to save the chain

PUBLISHED : Tuesday, 25 July, 2017, 8:05pm
UPDATED : Tuesday, 25 July, 2017, 9:08pm

A former director of shuttered gym chain California Fitness’ parent company was fined HK$202,000 by a Hong Kong court on Tuesday after he admitted defaulting on HK$1.14 million in salary payments to staff last year.

Wong Ping-kuen, 56, was also ordered to pay outstanding wages of HK$379,000.

He pleaded guilty to 101 summonses of failing to pay wages by the due date, an offence punishable by a HK$350,000 fine and three years in prison.

Eastern Court heard JV Fitness wilfully and without reasonable excuse failed to pay wages totalling HK$1.14 million on time to 99 employees.

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Deputy magistrate Arthur Lam Hei-wei said the courts had a responsibility to safeguard employee benefits.

But he decided against imposing a prison sentence after hearing that Wong had never committed wage-related offences in his 37 years of running a renovation business and was unlikely to reoffend as he would never again operate a business he was not familiar with.

“I trusted the wrong people,” Wong said as the magistrate delivered the sentence.

The case came a year after JV Fitness closed all 12 outlets of California Fitness, mYoga and Leap last July amid unpaid debts of more than HK$100 million. The move affected some 64,000 members and 700 employees.

The parent company was officially wound up last November after Wong filed a petition for closure.

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Wong revealed in mitigation that he had initially invested HK$56 million in the chain in December 2015 after he met former director Cheng Kar-tat and became a director.

He thought the chain was a promising business with its many outlets, and did not study its finances in detail.

But he soon discovered the company had been recording monthly losses of HK$5 million for some time due to high rents and wages for star trainers, who earned more than he did.

Wong said he was eventually forced to wind up the company after failing to find a white knight or turn losses into gains after injecting more than HK$30 million into the business.

Court documents showed the company’s coaches earned a monthly salary ranging from HK$8,000 to HK$10,000, while fitness managers earned HK$18,000 and equipment maintenance officers HK$20,000.

A Labour Department spokesman said: “The ruling helps disseminate a strong message to all employers and responsible officers of companies that they have to pay wages to employees within the time limit in accordance with the Employment Ordinance.”