News 3 July 2018

Fair Work Ombudsman succeeds in underpayments and adverse action case

The Fair Work Ombudsman (the “FWO”) has successfully pursued a hotel and its owner in the Federal Circuit Court of Australia (the “Court”) resulting in an order for penalties exceeding $200,000.

The action comprised of three elements: underpayment of wages, penalties and allowances; an adverse action claim alleging the business discriminated Malaysian employees treating them less favourable than Australian employees; and failing to comply with records-keeping requirement.

The FWO was successful, resulting in both the business and business owner being required to rectify the underpayment and pay pecuniary penalties. In his judgement, Judge Baker noted that whilst 17 employees had been underpaid the “contraventions were not deliberate”. However, when considering “the deliberate decision to treat [the Malaysian employees] differently to other employees”, Judge Baker concluded the business owner “was well aware of his obligations to pay them their entitlements under the relevant awards. They were taken advantage of, coming from Malaysia and being of Chinese descent”.

The FWO highlighted the business targeted these employees by demanding a six to seven day working week consisting of long hours. The FWO argued that the business was aware such practice was acceptable in Malaysian employment and used that knowledge to manipulate the employment relationship. Specifically the business owner referred to the Malaysian employees as “family” and pressured them to longer hours. Judge Baker commented these workers were in a “vulnerable and dependent position” due to their limited knowledge of Australian workplace laws.

Overall, the Court accepted the “substantive and operative reason” for treating the Malaysian employees differently was because of their race. The Court found the business owner knew the discriminatory working conditions were similar to the employees’ country of origin and chose to use this against them in their Australian employment.

The Court viewed this as a “serious contravention of workplace laws” and handed down substantial penalties. The business was penalised $176,005 for the contraventions of the Fair Work Act, including the underpayments and adverse action. The business owner was penalised $35,099. In addition, the business was required to rectify all underpayments.

Understand your minimum obligations for workplace relations regulations by attending our Know your award training. The program will increase your knowledge of common clauses within modern awards, and assist in classifying your employees within the modern award system.

Written by Nicole Pritchard, Workplace Relations Advice Line Advisor

Fair Work Ombudsman v Yenida Pty Ltd & Anor [2017] FCCA 2299

Fair Work Ombudsman v Yenida Pty Ltd & Anor [2018] FCCA 1342

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