Employers face court over alleged failure to comply with back-payment demands

12 February 2014

The Fair Work Ombudsman is encouraging employers who have underpaid their staff to rectify any outstanding entitlements promptly, after launching a series of legal proceedings against employers who have allegedly failed to comply with back-payment demands.

Under the Fair Work Act, employers must comply with Compliance Notices issued by Fair Work Inspectors, unless they have a reasonable excuse, or make a Court application to challenge the Notice.

A number of employers in Queensland and Victoria are facing civil proceedings in Court for allegedly failing to take action after being issued with Fair Work Ombudsman Compliance Notices late last year:

  • Brisbane information technology consultancy Extrados Solutions Pty Ltd and the company's sole director Peter Johnson allegedly failed to back-pay an employee aged in his early 20s a total of $10,813 in wages and annual leave entitlements. The employee was a Chinese national who was in Australia on a 457 visa and spoke limited English.
  • Gold Coast-based Absynthe Restaurant Pty Ltd and the restaurant's owner-operator Meyjitte Boughenout allegedly failed to back-pay an 18-year-old apprentice chef $4195 in wages and annual leave entitlements.
  • Megha Sood – former owner-operator of Anahata Food for Life Indian restaurant at Ocean Grove, in Victoria - and her company Anahata Naturals Pty Ltd allegedly failed to back-pay $8707 to an underpaid chef, a Sri Lankan national who was in Australia on a temporary resident visa.
  • Melbourne orthodontics specialist Daladontics (Vic.) Pty Ltd allegedly failed to back-pay a total of $9345 to two dental technicians who had been underpaid wages. One employee is a foreign worker who was in Australia on a temporary working visa.

The maximum penalty for a company for failing to comply with a Compliance Notice is $25,500 per breach, while the maximum penalty for individuals is $5100 per breach.

In each case, the Fair Work Ombudsman is also seeking an additional Court Order for the alleged underpayment to be rectified in full. 

Fair Work Ombudsman, Natalie James, said employers - and professionals who provide advice to employers - need to be aware of their obligations under a Compliance Notice issued by inspectors.

"Fair Work inspectors have made extensive efforts to engage with these employers in relation to the alleged underpayments but have not been able to secure sufficient co-operation from the employers," Ms James said.

Fair Work inspectors identify underpayments at thousands of businesses nationally each year and resolve the vast majority of these matters by working co-operatively with employers, guiding them through the back-payment process and assisting them to put systems in place to ensure they pay their staff correctly in future.

However, if employers refuse to co-operate, Fair Work inspectors will consider compliance action, including issuing statute-based Compliance Notices, which usually seek action within 28 days.

On Compliance Notices, Ms James says: "It is important for employers to understand that the Fair Work Ombudsman is simply seeking to recover wages that should have been paid in the first instance - we are not seeking to be punitive."

However, the Fair Work Ombudsman is willing to initiate legal proceedings where Compliance Notices are subsequently ignored and the Agency believes it is in the public interest to do so.

The matters listed above are being heard in the Federal Circuit Court.

Employers and employees seeking assistance should visit www.fairwork.gov.au or contact the Fair Work Infoline on 13 13 94. A free interpreter service is available by calling 13 14 50.

Helpful online tools include PayCheck Plus and an Award Finder to assist business owners and employees determine the correct award and minimum wages for their industry, templates for pay slips and time-and-wages records and a range of fact sheets on workplace entitlements.

An 'Industries" section on the website provides extra, specialised information for employers and employees in a range of industries, including retail, horticulture, road transport, accommodation and hospitality, cleaning, clerical, vehicle, electrical, fast food, building and construction, hair and beauty, joinery, metal manufacturing, social and community services, plumbing and security.

Dedicated website resources for small businesses, including a Fair Work Handbook and tips for new employers about hiring staff, are available at www.fairwork.gov.au/smallbusiness

Ms James says supporting small business with information and advice on workplace laws is a high priority for the Agency.

"We are striving to provide accessible, credible and reliable information, focusing our resources quite deliberately at times on the sectors we believe need the most assistance," she said.

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Media inquiries:

Ryan Pedler, Assistant Media Director
Mobile: 0411 430 902