Fair Work Ombudsman “warns employers to ensure they are paying their staff correctly”

In recent Vision in the Workplace articles we reported that the Fair Work Ombudsman (the FWO) has pledged to crack down on businesses and employers that underpay their staff. Since making that commitment to hold businesses accountable, we have seen a substantial increase in the number of businesses that have been monitored, investigated and ultimately penalised for underpaying their workers. With some companies self-reporting in an effort to minimise any penalties.

Here are some of the more recent individuals and businesses that have found themselves in hot water with the FWO:

George Calombaris, Made Establishment

The celebrity chef, George Calombaris, who judges on the Australian show Masterchef, has been fined after admitting to underpaying workers $7.83 million in wages across his hospitality empire and company, Made Establishment.

Mr Calombaris was slapped with a $200,000 ‘contrition payment’ and must also make a number of public statements to promote compliance with the Fair Work Act. The Company must also pay external auditors every year until 2022 to ensure that pay and conditions are correct for all employees across all restaurants.

Sydney businessman, Kit Antony (Tony) Lam

A Sydney businessman Tony Lam has been accused of underpaying his nanny up to $155,178, requiring his employee to work between 88 and 106 hours a week and paying her only $2.33 per hour.

The FWO has launched proceedings in the Federal Court against Mr Lam alleging “the worker in this case was vulnerable to exploitation…and did not know what her workplace rights were”; Mr Lam’s wife, Ms Ming Wei Tong, will also face court for her alleged involvement in requiring the nanny to work unreasonable hours.

Michael Hill

The Michael Hill jewellery chain announced in early July that it had inadvertently underpaid workers by $25 million over the past six years. The FWO stated it was not made aware of the underpayment before the company announced it publicly but that it was “concerned by the scale of the reported underpayments” and would be contacting the company directly.

Super Retail

In February of this year, the retail group that owns Supercheap Auto, Rebel Sport and Macpac announced it had underpaid its workers $32 million over the past six years as it failed to apply overtime rates properly.

The retail giant is currently engaging in discussions with the FWO in relation to this substantial underpayment. The FWO is yet to decide on the penalties that could be applied for the breaches.

Wage theft: What does this mean for employers?

It appears almost certain that the FWO is going to follow through on its promise to crack down on businesses that are underpaying their workers. The maximum penalty that the FWO can impose on a company breaching workplace laws is $630,000 per contravention.

The ramifications for employers don’t stop there. The very worst offenders may soon face jail sentences. Prime Minister Scott Morrison, Attorney-General Christian Porter, former ACCC Chairman Allan Fels, Liberal Senator Eric Abetz and Labor’s industrial relations spokesman Tony Burke (among others) have all recently called for employers to face criminal penalties for exploiting workers. It was recently announced that the Attorney-General is currently drafting laws to deal with criminalising worker exploitation.

Employers must ensure now more than ever that they are satisfying their obligations under any relevant modern award.

If you have any questions relating to underpaid wages please do not hesitate to contact Nick Stevens, Jane Murray or Angharad Owens-Strauss.