The manager of the Fairy Meadow restaurant told the Mercury he was informed of the closure yesterday afternoon by his manager at the head office of Chili's in Wentworthville.

"We will not be open tomorrow, that is correct and I can not say whether we will be opening again," he said.

"I cannot say whether we are indefinitely closed or we will be opening up again."

The manager at the Shellharbour restaurant refused to comment.

The two restaurants employ a combined staff of 87 people, mostly young people who work casually and part-time.

One staff member told the Mercury last night he was worried whether he would receive his last week of wages, uniform deposit and accumulated annual leave, which amounted to about $800.

He believed all five stores across the state would not be reopening.

Last night, while staff at the two Illawarra restaurants continued to serve customers, the Chili's website had been pulled down and no-one answered the phone at head office.

In October the NSW Office of Industrial Relations said they would prosecute Chili's for allegedly failing to meet a deadline to pay more than $45,000 in wages owed to young staff.

The same month the federal Workplace Ombudsman said they would prosecute and fine the chain almost $300,000, after an investigation found staff had been underpaid and pressured into signing Australian Workplace Agreements.

Last night South Coast Labour Council Secretary Arthur Rorris said there needs to be greater protection of staff entitlements.

"It is not unusual for enterprises like this that are facing prosecutions and large fines to fold up, leaving their workers in the lurch with thousands and thousands of dollars in entitlements owed," he said.

The investigations by the state and federal workers' agencies were triggered in July when employees at the Fairy Meadow restaurant claimed they had been exploited by management.

The staff alleged they were expected to cover unpaid bills left by customers and were told to bring their own change to work.