Melbourne retailer penalised for deliberate breaches

12 February 2021

The Fair Work Ombudsman has secured a total of $256,000 in penalties in court, including for five ‘serious contraventions’ under the Protecting Vulnerable Workers laws, against a Melbourne toy retailer company and its director for deliberately underpaying migrant employees.

The Federal Court has imposed a $215,000 penalty against IE Enterprises, which operated ‘Uncle Toys’ pop-up stores in Melbourne shopping centres, and an additional $41,000 penalty against Melbourne man Eyal Israel, the owner and manager of the company.

Mr Israel and his company paid eight casual workers low rates (from as little as $6.70 an hour), and did not pay some employees at all for some hours worked. Record-keeping and pay slip laws were also breached.

The affected employees were visa holders from countries including Malta, the Netherlands and the Republic of Korea, and most were aged in their 20s.

The employees were underpaid for between one and nine weeks of work performed between October 2017 and January 2018. They worked at Uncle Toys pop-up stores in Ringwood, Hoppers Crossing, Preston, Frankston, Narre Warren, Cheltenham and Wantirna South shopping centres.

In addition to the penalties, the court has ordered IE Enterprises to back-pay the employees a total of $21,748. Individual underpayments range from $395 to $5,041.

The FWO has received requests for assistance from former employees of IE Enterprises dating back several years, and previously issued the company with a letter of caution, education materials and pay guides.

Judge Stewart Anderson found that Mr Israel and his company had shown “no contrition, no cooperation and taken no corrective action” for conduct that was “deliberate and systematic and had a significant impact on the relevant employees”, who were vulnerable, young foreign nationals.

One worker gave evidence that she borrowed money from a friend in Korea to afford basic living expenses. Another gave evidence that she was “very worried” about how she would afford to pay for food and accommodation, while another employee said he was afraid that, if he resigned, he would not receive his previous week’s wages, and that he “felt exploited and helpless”.

Judge Anderson said there was a strong need in this case to impose penalties which were high enough to deter other employers from similar conduct, particularly in the retail industry, which attracts young, often unskilled overseas workers.

“Underpayment of employees and the exploitation of vulnerable employees undermines core principles of the Australian workplace relations system. Those core principles include an enforceable and fair safety net of employment terms and conditions. It is, in my view, fundamental to the effectiveness of workplace regulation in Australia that this safety net is extended to all employees, regardless of their youth or visa status,” Judge Anderson said.

It is the second time the Fair Work Ombudsman has secured penalties in court under the ‘serious contraventions’ provisions introduced by the Protecting Vulnerable Workers laws, after obtaining penalties against a Perth café franchisee last year for repeat offending.

Under the laws, which came into effect in September 2017, the maximum penalties for serious contraventions are $630,000 per breach for a company and $126,000 for an individual, 10-times the penalties which would ordinarily apply.

Acting Fair Work Ombudsman Jeremy O’Sullivan said the new judgment highlighted the importance of the higher penalties which could be imposed for serious contraventions to deter employers from deliberately doing the wrong thing.

“We 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,” Mr O’Sullivan said.

“Failing to correct underpayment issues after being put on notice is simply unacceptable. Employers should also be aware that we treat cases involving underpayment of young and migrant workers particularly seriously, because we are conscious that they can be vulnerable due to factors such as a lack of awareness of their entitlements and a reluctance to complain. Any workers with concerns should contact us,” Mr O’Sullivan said. 

Employers and employees can visit or call the Fair Work Infoline on 13 13 94 for free advice and assistance about their rights and obligations in the workplace. A free interpreter service is available on 13 14 50. Know a workplace that isn’t doing the right thing but don’t want to get involved? Report it to us anonymously – in your language.

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Media inquiries:

Matthew Raggatt, Assistant Media Director (A/g)
Mobile: 0466 470 507

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