Underpayments of $5,111 to 11 staff and a “cavalier” attitude towards obligations have been classed as “serious contraventions” and as a result penalties 8 times higher than the standard have been applied resulting in $191,646 in penalties to the business and $ 38,394 in penalties to the General Manager.
In the first case to test the limits of the “serious contraventions” penalties, that were brought in with the Vunerable Workers amendments to the Fair Work Act, Judge Kendall has applied penalties 8 times higher than the standard.
The business, a cafe, and its General Manager were fined $45,000 for pay slip breaches and underpaying 22 staff a total of $27,920 in March 2018. Despite the commitment of the General Manager to improving the payroll practices after this case, follow up by the Fair Work Ombudsman later found the business to have underpaid 11 staff a total of $5,111 between October 2017 and April 2018.
The serious contravention provisions, that allow for penalties to be increased to up to 10 times the standard levels, were activated due to the previous conduct of the business.
Judge Kendall found that “the respondents [business] had no intention of changing their conduct and would have continued as they had been if the [Fair Work Ombudsman] had not intervened when it did”.
“The fact that the respondents [business] did not take steps to engage an external [payroll] consultant for over one year after they had said they would do so and only in response to the [FWO]’s investigation is, again, entirely unsatisfactory.
“Importantly, the respondents [business] failed to comply with the most basic obligations owed to employees.
“Their conduct reflects a cavalier and entirely unacceptable approach to core legal obligations.”
Learnings for Employers
It is well understood that operating a business, particularly a small business, can be difficult and overwhelming, and that getting employment compliance, with its constantly changing elements, right is difficult. Mistakes happen, accidental errors are not uncommon, however, when identified they need to be corrected without delay and systems reviewed to ensure that they do not happen again.
In circumstances where underpayments have been found and the business makes no effort to identify issues and address them, or in situations where the business is willfully blind to situations of underpayment, then the “serious contraventions” provisions can, and will be used by the courts to ensure that the penalty is substantial.
With the now proven use of the “serious contraventions” provisions at the Federal level and the States now introducing criminalisation of underpayment it is more important than every business make time and take time to review their systems to identify and correct issues.
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HR Highlights are things to consider, implement and watch out for in your business. They are provided as general advice and should seek further advice on your situation by emailing email@example.com to reach one of the ACAPMA Workplace Relations Professionals, its free for members.
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Elisha Radwanowski BCom(HRM&IR)
Executive Manager Employment and Training