In one of the latest underpayment cases the Director and co-founder of Chatime has been found to be liable to answer for underpayments despite arguing that his lack of visibility of actual payments and lack of understanding of the Award system and entitlements.
The bubble-tea chain is facing a case for in excess $170,000 in underpayments due to breaches in casual, weekend and penalty rates. The case has not yet proceeded through the courts yet due to being stalled by a series of legal objections from the Director.
In November 2022 the Federal Circuit Judge hearing the case rejected the first objection, which amounted to the argument that there were no underpayments because Chatime paid “Chinatown market rates”.
This week Judge Manousaridis rejected a further objection from the Director that contended that he could not be liable for the underpayments because he didn’t understand the requirements or the Awards.
In rejecting the objections Judge Manousaridis clarified that it is “unnecessary to prove the [the director] believed or knew that the conduct that constituted the contraventions contravened s45 of the FW Act, or that he knew or believed that such conduct was unlawful” and noted that it was clear that the Director had knowledge of the breaches and broad knowledge of the requirements “even though I have found that [the director] believed he did not commit Chatime to engage in any unlawful activity”.
The case is listed for penalties hearing on 31 August 2023
Learnings for all businesses
“There is simply no excuse for underpayment of wages. Ignorance is no defence and all Directors and senior management have a responsibility to educate themselves on the requirements particular to wage compliance in their particular industry. Further they also have a responsibility to put into place systems to review actual practice against those requirements to ensure the business is actually meeting them. ‘I didn’t know it was a breach’, is not an excuse for underpayments, nor is it a protection against liability”, explains ACAPMA Elisha Radwanowski.
Here to Help
This article is general in nature and covers things to consider, implement and watch out for in your business. It is provided as general advice and you should seek further advice on your situation.
ACAPMA Employment Professionals are available to assist ACAPMA Members via email@example.com. ACAPMA membership is affordable at only $860 inc GST per year for a single site and valuable with sites gaining access to ACAPMA Guides, Templates, Resources, HR advice support and representation as well as a raft of other benefits and discounts. Visit: https://acapma.com.au/membership/ to learn more or to apply for ACAPMA membership.
Elisha Radwanowski BCom(HRM & IR)
Executive Manager for Employment and Compliance