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Fair Work Ombudsman achieves record fine in underpayment case

The FWO have successfully pursued a regional café and its Director for the exploitation of overseas workers, as well as three other Australian citizen employees, handing down the highest penalty the jurisdiction has seen in relation to the underpayment of workers.

The Employer, who failed to appear at either the substantive hearing or the penalty hearing, was found by Judge Altobelli to have engaged in a ‘cash back’ scheme which resulted in two overseas workers in particular being significantly underpaid.

In terms of the ‘cash back’ scheme, His Honour heard that the Employer required the overseas workers repay part of their wages in cash to the Director. They did so “under threat of cancellation of their visas and termination of their employment.”

The Employer also failed to provide the overseas workers with their minimum wage entitlements, and deprived them of leave entitlements.  In addition, the Employer underpaid three other workers with respect to their minimum wage entitlements.

Also concerning to Judge Altobelli was that the Employer and the Director created fraudulent employee records containing incorrect information about the hours worked and amounts paid to these employees. The Employer and the Director then provided those false records to the FWO.

In a default judgment last year, the Employer was ordered to pay $87,909.65 in compensation to the underpaid employees.  The matter was then listed for a penalties hearing.

In the penalty hearing, Judge Altobelli was highly critical of the Employer and the Director, stating that “the conduct of the Respondents giving rise to the proceedings was extremely serious and highly aggravating.”   He referenced the nature of the cash back scheme and described that conduct as “The [Employer and director] deliberately and blatantly exploited the vulnerability of visa holders reliant on their employer to remain in Australia”.

Judge Altobelli handed down penalties at the top end of the Fair Work Ombudsman’s recommended penalty range, noting that the FWO was probably conservative in the circumstances of the conduct engaged in by the Director and the Employer.  He ordered the Employer to pay $444,100 in penalties, and the Director to pay $88,910 in penalties.

 Lisa Aitken is an Accredited Specialist in Workplace Relations Law and the Managing Partner of Aitken Legal, a law firm specialising in employment law for employers. www.aitkenlegal.com.au. The information in this column is intended as a guide only.  Liability limited by a scheme approved under professional standards legislation.