By Andrew Piper and Alex Millman, NRA Legal
An ex-franchisee has been slapped with over $230,000 worth of penalties by the Federal Circuit Court for continuing to underpay vulnerable workers despite being prosecuted previously for similar conduct.
This prosecution is particularly significant since it is the first time that the Fair Work Ombudsman has secured penalties for ‘serious contraventions’, introduced in late 2017 under the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) (VW Act).
Fair Work Ombudsman v Tac Pham Pty Ltd & Anor [2020] FCCA 3036 (12 November 2020)
“Cavalier and unacceptable”
A former franchisee for Han’s Café, Tac Pham Pty Ltd, was penalised by the Court for failing to provide payslips with the required information, as well as underpaying employees. In particular, the underpayments involved vulnerable workers including junior and migrant employees.
Importantly, this was not the first time that the company had failed to comply with workplace laws. Previously in March 2018, the Fair Work Ombudsman secured penalties of $45,000 against the company and its General Manager, Ms Pham (Fair Work Ombudsman v Tac Pham Pty Ltd & Anor [2018] FCA 120).
In the view of the Court, the fact that the company and Ms Pham had knowledge that their practices were non-compliant and continued with that course of action regardless showed a “… cavalier and entirely unacceptable approach to core legal obligations”.
The types of contraventions committed by the Company include failures to pay minimum hourly rates and penalty rates, and not providing employees with their minimum shifts.
The company also failed on many occasions to provide employees with payslips, and on the occasions when they did, they failed to include information that was required by law.
Why so “serious”?
In September 2017, the VW Act came into effect making key changes to the Fair Work Act 2009 (Cth) including, among other matters:
- increasing the penalties for “serious contraventions” of workplace laws;
- increasing penalties for breaches of record-keeping and pay slip obligations; and
- strengthening the powers of the Fair Work Ombudsman to collect evidence related to its investigations.
Relevantly to this matter a “serious contravention” occurs when:
- an individual or business knowingly contravenes an obligation under a workplace law; and
- this contravention was part of a systematic pattern of conduct relating to one or more persons.
The maximum penalties for a “serious contravention” are (as of December 2020) $133,200 per contravention for an individual and $666,000 per contravention for a company. This amounts to ten-times the maximum penalties that would usually apply for a contravention.
Would you like fines with that?
The Court noted that “… in an industry [hospitality] which has a high proportion of junior employees, the need to ensure that the rights and entitlements of those more vulnerable are met is particularly high. Employers must be deterred from engaging in similar conduct.”
The eye-watering amounts of these penalties, especially when compared with the much lower penalties imposed two years prior, should reinforce how crucial it is for businesses that operate in industries with a high proportion of junior or migrant employees to make sure they are paying their employees correctly and complying with their record-keeping obligations.
In a press release, the Fair Work Ombudsman Sandra Parker has stated that “[the Fair Work Ombudsman] will continue to make full use of the protecting vulnerable workers laws to ensure that any individuals or companies who commit serious contraventions are held to account and understand the consequences of their failures”.
There are currently three other unrelated matters before the courts where the Fair Work Ombudsman has alleged that the vulnerable workers laws have been breached and where it is seeking that these penalties for serious contraventions be applied.
As an employer, particularly in the retail, fast food and hospitality industries it is essential that you take steps to ensure that your payroll practices are compliant.
If you are concerned about how to ensure compliance with your obligations under workplace laws, contact 1800 RETAIL (1800 738 245) to speak with our Workplace Relations Advisors.
