Court fines Adelaide company $40,000 for underpaying 10 workers

23 February 2010

An Adelaide company has been fined $40,000 for failing to pay the entitlements of 10 employees it dismissed when it suddenly shut down its operations.

The penalty was imposed yesterday on the Adelaide Foam Company Pty Ltd, which formerly operated a foam and furniture making business at Edwardstown.

It followed a prosecution in the Federal Magistrates Court in Adelaide by the Fair Work Ombudsman.

The company has also been instructed to back-pay the 10 workers about $72,000 in severance pay and pay in lieu notice (plus interest) within 60 days.

Federal Magistrate Denys Simpson delivered his judgment after finding the company had committed two breaches of workplace law by failing to pay-out the workers’ entitlements when it closed its Edwardstown business and terminated their employment in June, 2006.

The workers performed a range of manufacturing and production duties.

The biggest underpayment was $10,797 owed to a worker who had been employed by the business for almost eight years.

Federal Magistrate Simpson said Adelaide Foam Company had not provided any evidence in court in relation to why it had failed to pay the workers’ entitlements and whether it continues to operate.

“The penalty should send a clear message to the business community that Parliament and courts treat conduct such as we have here as extremely serious,” he said in his judgment.

Fair Work Ombudsman South Australian Director Carey Trundle says the court penalty reinforces the obligation on employers contemplating laying off staff to ensure they pay workers their full redundancy entitlements.

“Severance pay plays a vital supporting role for people while they attempt to pick themselves up, find a new job and get back on their feet,” Ms Trundle said.

The Fair Work Ombudsman promotes harmonious, productive and co-operative workplaces. It also monitors compliance and investigates breaches of national workplace laws.

Employers or employees seeking assistance should contact the Fair Work Infoline on 13 13 94 or visit For translations call 13 14 50.

Media inquiries:

Craig Bildstien, Director Media & Stakeholder Relations,
0419 818 484

Ryan Pedler, Media & Stakeholder Relations Senior Adviser
(03) 9954 2561, 0434 365 924

Want to save this information for later?

If you might need to read this information again, save it for later so you can access it quickly and easily.


Page reference No: 4279