The Business, a massage parlour operator, employed a full-time massage therapist and paid her in cash on a commission-only basis, despite the business and the employee’s role being covered by the Hair and Beauty Industry Award 2010 (“the Award”).
During the employment period, the employee worked between five and seven days per week, including weekends, and received between 40 to 45 per cent of the price of all massages performed.
The Fair Work Ombudsman (FWO) issued the business with a Notice to Produce document relating to the massage therapist’s employment - including records of her rate of pay, payslips, and hours worked. The Business engaged an accountancy firm to update the records requested and then provide those records to the FWO. The Business authorised the accountant to create payslips and various documents purporting to relate to the employee’s employment.
During the massage therapist’s seven-month employment period, it was found she was underpaid a total of $13,500 as the employee should have been paid the minimum rates of pay under the Award for all ordinary hours worked, as well as Saturday and Sunday penalty rates, overtime, and public holidays penalty rates.
It also came to light that the Business breached the Award by requiring the employee to work more than six consecutive days in a row, not paying the employee annual leave or leave loading during at the cessation of employment, and failing to make superannuation contributions.
The Federal Circuit Court found that the family-run business had been made aware on multiple occasions that the Award applied to the employee. The FWO was seeking penalties between $16,200 and $22,600 for each of the 26 breaches, to be paid by the director and secretary of the Business.
However, the Judge took into account the “financially crushing effect” the penalties would have if imposed, noting the Business was under extreme financial pressure both as a business and personally for the owners. The contrition, cooperation and prompt repayments were taken into account and resulted in the director, secretary and Business being ordered to pay $14,100 for the 26 breaches.
The Judge also imposed a penalty of $5,000 against the accountancy firm for providing false and misleading records. The accountancy firm’s involvement in the matter was significant but there was no evidence that similar previous contraventions had occurred.
Learnings for business
This case demonstrates businesses must understand which modern awards apply to their businesses and employees and ensure they comply not only with the minimum rates of pay, but all conditions of employment as well as record keeping requirements.
The importance of keeping accurate records in the event a dispute arises, or the FWO requests the same is vital, as failing to do so, can result is costly consequences.
How we can assist
Understand your minimum obligations is vital. If would like to discuss award coverage and classification to ensure your business is complying call the Victorian Chamber Workplace Relations Advice Line on (03) 8662 5222.
 FCCA 2920