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Employee underpayment: another cautionary tale

March 3, 2016


Despite all of the media attention and repeated warnings from the Fair Work Ombudsman (FWO), employers are continuing to be caught underpaying their employees. The latest in a string of such cases shows business owners are simply not paying attention.

What was it this time?

The FWO has commenced proceedings against a small Melbourne retailer who had allegedly been underpaying three shop assistants with rates as low as $16-$17 an hour, which is not only well below the retail Award rates, but is also actually less than the national minimum wage of $17.29. Overall, the alleged underpayments total over $90,000.

Not only was the base rate of pay too low, but there were also several alleged breaches of the General Retail Industry Award, including a failure to pay casual loadings, annual leave and penalty rates, and contraventions of the meal breaks and minimum engagement period provisions.

Another familiar factor in this case was the involvement of migrant workers – two of the affected employees are from Thailand, working in Australia on visas.

What are the consequences?

While the FWO does not always make the decision to litigate underpayments, in this case the seriousness of the contraventions, in addition to the fact that the employer had previously been educated about his workplace obligations, was enough for the FWO to commence legal proceedings.

The business itself could be fined up to $51,000 per contravention, while the business owner potentially faces up to $10,200 per contravention as an individual. The FWO is also seeking an injunction preventing the business and its owner from future contraventions of workplace laws.

What action should I take?

Employers need to be mindful of their obligations under the Fair Work Act and any applicable Modern Awards or Enterprise Agreements. Be aware that the minimum rates of pay under Awards are usually increased in July every year, and ensure that you keep up-to-date with any changes to your workplace obligations.

The sheer number of businesses which have been prosecuted in the last few years for underpayments continues to astound, and should serve as a pointed reminder that no one is going to “get away with it”. Employee underpayments are being specifically targeted by the FWO and no business, whether large like 7-Eleven or small like this retailer, is safe from their scrutiny.

For more information on underpayments and what this means for you, clients should contact the HR Assured team. If you’d like more information about the benefits of becoming an HR Assured client contact us today for an informal chat.