Consequences of contravening the Fair Work Act 2009

A recent decision of the Federal Circuit Court (the court) highlighted the consequence of contravening the Fair Work Act 2009 (Cth) (the Act) and should serve as a warning to all business to ensure that they meet their obligations under the Act when employing staff.

In January 2017, Tac Pham Pty Ltd (the First Respondent) was the subject of an audit by the Fair Work Ombudsman (FWO). The audit resulted in findings that the First Respondent had underpaid 25 employees during the period between 22 December 2014 and 20 December 2015 in relation to:

  • failures to pay minimum Award rates of pay including rates of pay for public holidays and shift allowances
  • not providing the employees with adequate payslips.

In March 2018, the FWO secured penalties of $37,000 and $7,500, respectively against the First Respondent and its General Manager (the Second Respondent).

The Second Respondent was the General Manager of the First Respondent and was at all times responsible for the direction, control, management and supervision of the First Respondent’s business.

On 30 May 2018, a FWO inspector attended the First Respondent’s premises as part of a national compliance monitoring campaign and issued the First Respondent with a notice to produce documents. The documents produced by the First Respondent revealed that 11 employees had been underpaid during the period between 25 September 2017 and 8 April 2018. The further contraventions included:

  • failures to pay minimum Award rates of pay
  • not providing the employees with adequate payslips.

Although the First Respondent rectified the underpayments shortly after the audit, on 19 December 2019, the FWO commenced further proceedings against both Respondents in relation to the subsequent contraventions.

The Court observed that there were at least 172 individual Award contraventions identified by the FWO.

In determining the appropriate penalty to impose, the Court considered it relevant that the respondents had not only continued to engage in the same offending behaviour as was identified in the initial contraventions but had also committed a number of additional contraventions.

In considering the size and financial resources of the Respondents, the Court observed that although there was evidence that the First Respondent was in liquidation and owed a debt of over $60,000 to the Australian Taxation Office, there was no evidence that either of the Respondents would be incapable of paying a fine.

The Court ultimately imposed a penalty of $191,646 against the First Respondent, and $38,394 against the Second Respondent.

Fair Work Ombudsman, Sandra Parker, said “the new judgment highlighted the value of the serious contraventions powers in providing a significant deterrent for employers doing the wrong thing.”

Fair Work Ombudsman v Tac Pham Pty Ltd & Anor 2020

Unintentional underpayments usually occur because of a failure to pay minimum entitlements under the industrial instrument or National Employment Standards. It can occur by simply not classifying employees correctly or by administration miscalculations. Employers must ensure that they meet all employment requirements.

The team at WR law can assist with employment contracts and advice on entitlements.

This article has been prepared for information purposes only and is not legal advice. For legal advice regarding your specific circumstances, please contact WR Law directly on (03) 5499 6131 or by email at admin@wrlaw.com.au

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