$160,000 in penalties after Sydney retailer underpays migrant employee $60,000

27 April 2018

The Fair Work Ombudsman has secured more than $160,000 in penalties after a Sydney retailer blatantly underpaid a Chinese migrant, leaving her struggling to pay for food, despite having previously committed to fixing its compliance problems.

JPA Manchester Pty Ltd, which sells bed linen and homewares under the trading name of ‘Benson Australia’ at retail outlets in Sydney and online, has been penalised $153,333 after underpaying the migrant worker $60,904 over a period of just under four years.

JPA Manchester initially claimed it had underpaid the worker less than $2000 and indicated it would contest the legal action – but the company eventually admitted the scale of the underpayment of the worker in Court.

In addition to the penalty, the Court ordered JPA Manchester to back-pay the worker in full.

The company’s owner-operator Jia Ping Ou has also been penalised an additional $8505 for his involvement in underpaying the worker’s annual leave entitlements and contraventions of record-keeping and pay slip laws.

The penalties and back-payment order, imposed in the Federal Circuit Court, are the result of legal action by the Fair Work Ombudsman.

Fair Work Ombudsman inspectors first investigated the matter when the underpaid worker requested assistance after her employment was terminated.

She had worked as a shop assistant at the Benson Australia stores in Redfern and Miranda between January 2012 and October 2015.

Inspectors found the worker had been paid flat rates ranging from $9 to $19.05 per hour, resulting in her being significantly short-changed for the ordinary hours and regular overtime work she performed.

Under the General Retail Industry Award 2010 at the time, the worker was entitled to rates of up to $18.99 for ordinary hours and up to $37.98 for overtime.

Inspectors also found that the worker was underpaid for a small amount of Saturday and public holiday work, and that her annual leave entitlements had not been paid.

In his judgment, Judge Justin Smith found that JPA Manchester had “displayed a significant disregard for workplace law” and said the vulnerability of the worker was a matter of particular concern.

“(The worker) is 56 years old with limited ability to speak and understand English,” Judge Smith said. “Her understanding of Australian workplace laws is also limited. Although she thought that she was being underpaid, (the worker) thought that, at her age, she would find it difficult to find alternative employment. These factors not only made (the worker) vulnerable to exploitation but also sharpened the impact of the contraventions on her.

“(The worker’s) uncontested evidence was that she struggled to pay for basic items such as food and could not afford to visit her family in China. She relied on others, including her former partner, for money and was concerned that she could not meet her mortgage obligations and might have to sell her home.

“On the other hand, JPA has, for years now, benefitted from the underpayment contraventions and has effectively shifted part of the costs burden of its business onto a vulnerable employee.”

The worker was underpaid despite JPA Manchester and Ou having publicly committed to revamping their workplace practices to ensure compliance under the terms of an Enforceable Undertaking (EU) they entered into with the Fair Work Ombudsman in 2014.

The EU was entered into in response to an investigation by the Fair Work Ombudsman finding JPA Manchester had underpaid another Sydney employee, a Chinese national, more than $27,000 between 2010 and 2014 after paying her as little as $8 an hour.

That matter was resolved through an EU, rather than litigation, because JPA Manchester and Ou fully co-operated with the Fair Work Ombudsman, promptly back-paid the worker and agreed to implement systems to ensure future compliance.

Judge Smith said it was concerning that JPA continued to underpay the worker in the latest matter even after entering into the EU with the Fair Work Ombudsman, and found that the contraventions that occurred after the EU took effect “must have been entirely deliberate”.

“There is no question that, at least by the time of the EU, JPA was aware of its various obligations under the Retail Award and yet it continued to underpay Ms Yu for another 12 months,” Judge Smith said.

Judge Smith found that JPA Manchester and Ou had displayed “little or no contrition” and there was a need to impose penalties that deterred them and other retail industry employers from future contraventions.

“The respondents took advantage of a vulnerable employee and the Court must send a clear signal to both of them as well as to other employers in the retail industry that workplace rights will not be overridden without significant consequences,” Judge Smith said.

The Fair Work Ombudsman also secured Court Orders requiring JPA Manchester to commission an audit of its compliance with workplace laws and for Ou and JPA Manchester’s managerial staff to undertake workplace relations training.

Fair Work Ombudsman Natalie James says JPA Manchester flouting the commitments made under the EU was completely unacceptable conduct.

“EUs can be an appropriate way for us to ensure a company that has had significant compliance problems rectified underpayments and pays its workers correctly in future, without the need for civil court proceedings, which are often lengthy and can significantly extend the time it takes for workers to receive their entitlements,” Ms James said.

“However, we expect businesses that have been the subject of a formal undertaking to take particular care to comply with the law in the future.

“The reckless indifference shown by this employer to their obligations is disgraceful.”

Ms James says employers should also take note that if compliance problems have been identified at a business, the Fair Work Ombudsman regularly conducts follow up checks to ensure sustainable compliance with workplace laws and ensures that any intelligence indicating further problems involving the business is acted upon as a matter of priority.

“Employers also need to be aware that new higher penalties of up to $630,000 per contravention for a company and $126,000 per contravention for an individual now apply in relation to serious breaches of work laws, following the commencement of the Protecting Vulnerable Workers laws,” she said.

Ms James says the outcome of the legal action also sends a message that there are serious consequences for deliberately exploiting migrant workers.

“We treat cases involving underpayment of migrant workers particularly seriously because we are conscious that they can be vulnerable due to a lack of awareness of their entitlements, language barriers and a reluctance to complain,” she said.

Ms James says it is concerning that the case is another example of a business operator from a culturally and linguistically diverse background underpaying a worker from within their own ethnic community.

“This case is another chance to make it clear that lawful minimum rates apply to all employees in Australia and they are not negotiable,” she said.

“We are actively seeking to dispel the myth that it’s OK to pay migrant workers a ‘going rate’ that undercuts the lawful minimum wage rates that apply in Australia.

“The wealth of free advice and educational material on our website – including in 40 different languages – and availability of our small business helpline means there is no excuse for mistakes, regardless of an employer’s background.”

Employers and employees can seek assistance at www.fairwork.gov.au or contact the Fair Work Infoline on 13 13 94. Small business callers can opt to receive priority service and a free interpreter service is available on 13 14 50.

The Fair Work Ombudsman’s ‘Record My Hours’ smartphone app is aimed at tackling the persistent problem of underpayment of vulnerable workers by using geofencing technology to provide workers with a record of the time they spend at their workplace. The app can be downloaded from the App Store and Google Play.

The Fair Work Ombudsman’s popular Anonymous Report function, available in 16 languages other than English, allows visa-holders to report workplace concerns anonymously to the agency in their own language.

The Fair Work Ombudsman’s online tools and resources can assist employers to determine their applicable Award, as well as classification and pay rates, allowances, overtime and penalty rates.

The Pay and Conditions Tool (PACT) provides advice about pay, shift, leave and redundancy entitlements and there are templates for pay slips and time-and-wages records.

Follow Fair Work Ombudsman Natalie James on Twitter @NatJamesFWO external-icon.png, the Fair Work Ombudsman @fairwork_gov_au External link icon or find us on Facebook www.facebook.com/fairwork.gov.au External link icon.

Sign up to receive the Fair Work Ombudsman’s media releases direct to your email inbox at www.fairwork.gov.au/mediareleases.

Media inquiries:

Ryan Pedler, Assistant Director - Media
Mobile: 0411 430 902

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