A Sydney man faces tens of thousands of dollars in fines after his Chinese restaurant allegedly underpaid staff more than $583,000 in just 16 months.

The Fair Work Ombudsman has also found that employment records were fabricated to disguise the underpayments.

New Shanghai restaurant at Charlestown Square.

The workers, including international students with limited English, were allegedly paid as little as $10 an hour, but were entitled to double that rate. Weekend, public holiday and overtime rates were between $24 and $45 per hour.

The Fair Work Ombudsman is taking legal action in the Federal Court in Sydney against Sydney man Zhong Yuan "John" Chen who owns the New Shanghai Charlestown restaurant at Lake Macquarie.