The cost of non-compliance.
The Federal Circuit Court has again taken a firm stance against non-compliance ordering penalties of $243,000 against the operators of retail fruit and vegetable and flower stores in Melbourne. The penalties were secured for the underpayment of workers, breaches of record keeping obligations and falsifying employment records.
Not only was the Company ordered to pay $200,000 in penalties, the Fair Work Ombudsman (FWO) successfully individual penalties against the director and operations manager who were ordered to pay $43,000, and $13,000 respectfully.
Three workers were underpaid by $132,956 between 2012 and 2014 as a result of the retailers paying flat rates of between $10 to $18.52 per hour. As a result of the unlawfully low flat rates of pay, the workers were underpaid minimum entitlements of ordinary hours, overtime and penalty rates in breach of the General Retail Industry Award 2010.
Additionally, there was an ‘off the books’ and ‘on the books’ payment system used to record certain hours worked and certain periods of employment, fostering the underpayments.
Following the commencement of proceedings, the Company corrected the underpayments in full. However, Judge John O’Sullivan commented that the conduct was “serious”, the underpayments “substantial”, and the false or misleading record keeping being the “gravest” of the contraventions, undermining the objectives of the Fair Work Act.
The FWO is continuing to send a strong message to employers that it is unacceptable to breach minimum entitlements and that such conduct would be detected and penalised.
In a separate matter, the FWO has also won a fivefold increase to the original fines imposed on a director for underpaying in excess of 40 security guards using flat rates of pay. This arose from the Federal Court’s finding that the ‘bundling’ of multiple Fair Work Act contraventions in the original ruling was incorrect. The total penalties in this case increased from $8,300 to $39,090 for nine contraventions.
The FWO has stated that should aspects of an employee’s employment be governed by multiple instruments such as by a modern award, an enterprise agreement, or the NES, irrespective of whether the contravened provisions are in substance identical, the maximum available penalties can be doubled or tripled depending on the number of breaches.
The cost of non-compliance is significant. Paying flat rates of pay without a full understanding of the underlying industrial instrument can land you in hot water with the regulator. To get in front of your obligations and ensure compliance, contact the HR Assured team today.