No Let Up by Fair Work Ombudsman During COVID Crisis

Whilst many businesses are closed and some struggling to stay in business during the COVID crisis, there seems to be no relaxation from the Fair Work Ombudsman (FWO) in pursuing and prosecuting businesses for the underpayment of wages.

Here are a few recent examples: The first matter involves the operators of three Din Tai Fung outlets have been accused of underpaying staff and providing false records to the FWO. The FWO has commenced legal action

against DTF World Square Pty Ltd and Selden Farlane Lachlan Investments Pty Ltd. Both companies are part of the larger group that operates Din Tai Fung restaurants in Sydney and Melbourne.

The allegations are that 17 employees were underpaid $157,025 from November 2017 to June 2018, with the exception of one employee, whose underpayments spanned from July 2014 to May 2018. All employees worked at the Chatswood and World Square locations in Sydney and the Emporium store in Melbourne.

Individual underpayments varied from $2,165 to $50,588, with flat hourly rates paid to 13 casual workers and fortnightly salaries that did not meet Award requirements (ordinary hours, penalty rates, overtime rates) paid to four full-time staff. It is also alleged that casual loading entitlements were underpaid.

The companies are also accused of holding and providing false records to Fair Work Inspectors, which understated hours worked and included false rates of pay for casual employees and these are serious allegations of contraventions under the Fair Work Act 2009.

The former director of both companies and HR Coordinator are all facing the Federal Court for their alleged involvement in some breaches. The individuals may face penalties of up to $12,600 per contravention, with the two companies facing penalties of up to $630,000 per serious contravention and $63,000 per other contravention.

To be clear, these are allegations only at this stage and the matter is listed in the Federal Court in late September 2020.

In another matter the former operators of two Hello Juice outlets in Victoria have been penalised $276,929 for deliberately exploiting employees.

Skypic Group Pty Ltd and Skypac Group Pty Ltd operated the Geelong outlet until April 2019 and the Werribee until March 2020. The companies, which no longer operate these outlets, have been penalised $161,988.75 and $80,325 respectively. The general manager of both stores has also been penalised an additional $34,616.

A total of 27 employees were underpaid a total of $38,458 over various periods in 2017, including juniors under the age of 18. The employees have been back-paid.

The FWO found employees were paid low, flat rates, (some as low as $10 per hour) resulting in underpayment of the ordinary hourly rates, casual loadings and penalty rates for weekend and public holiday work they were entitled to under the Fast Food Industry Award 2010.

Further, it was found that on two separate occasions, Gong and Skypac requested a worker pay amounts totaling $4,942.19 to cover part of a rectification payment and a tax refund payment made to her which was a clear breach of laws relating to cash-back arrangements.

The individuals and the companies further breached workplace laws relating to pay slips and record-keeping and they failed to comply with a Notice to Produce records or documents, and were found to have provided inspectors with false or misleading records. Again, these are serious contraventions of the Fair Work Act 2009.

Justice O’Sullivan of the Federal Court commented in his judgment that “It is also an illustration of, and all too common, a phenomena where employers from culturally and linguistically diverse backgrounds who exploit workers (including, or especially, from within their own ethnic communities) and then come before the Court and seek to rely on their own alleged ignorance of workplace laws or foreign cultural norms to mitigate any penalties that need to be applied when they are finally caught out”.

It is important that clients understand that underpayment of wages can be costly, not just in terms of penalties and back pay that arise, but also the damage to the reputation and brand if these issues become public knowledge. If you any concerns about payment of wages to staff, please do not hesitate to contact us and we can undertake an audit to ensure compliance with Awards and legislation.

For further information about consultation requirements, and the process to be followed for any of the above scenarios, please contact Effective Workplace Solutions.

Greg Arnold