Popular Melbourne restaurant Dainty Sichuan allegedly paid employees $10 an hour while they worked 10 hour-plus shifts, seven days a week.

The Fair Work Ombudsman has commenced legal action in the Federal Circuit Court against the companies behind Tina's Noodle Kitchen in Box Hill and Dainty Sichuan, on Swanston Street in the CBD, for the alleged underpayments. 

The restaurants allegedly underpaid their staff almost $31,000 in just a two-week period.

The allegations have the potential to embarrass lord mayor Robert Doyle with the restaurant a major donor to his successful reelection campaign.

The restaurants' owner-operator, Ye Shao, and in-house accountant Yizhu 'Jessica' Ding will also face court. The pair face maximum penalties of $10,800 per contravention, if found guilty.

Restaurant group Dainty Sichuan donated $80,000 to Cr Doyle's 2016 election campaign. It was by far the largest single corporate donation in the recent local government elections across the state. 

Fair Work Ombudsman inspectors and Department of Immigration and Border Protection officers raided the restaurants last year as part of a joint investigation.

The Ombudsman alleges 17 employees at Dainty Sichuan were underpaid $18,190. Another 13 employees at Tina's Noodle Kitchen were underpaid $12,805.

The employees were allegedly paid flat rates of between $10 and $22 an hour. Some worked six or seven days a week and often more than 10 hours a day.

The Ombudsman alleges they were not paid minimum hourly rates, nor correct penalty rates for weekends, public holidays, overtime, or late-night work.

The companies have already started paying back the monies.

Acting Fair Work Ombudsman Mark Scully said the decision to take legal action was made because the alleged underpayment was blatant and exploited vulnerable overseas workers.

"It is not OK for employers to arbitrarily determine low, flat rates of pay. Minimum wage rates apply to everyone in Australia – including visa-holders – and they are not negotiable," Mr Scully said.

The case is listed for a directions hearing in the Federal Circuit Court in Melbourne on August 28.

Mr Shao and Ms Ding declined to comment.