A recent decision by the Federal Court of Australia (FCA) has demonstrated the importance of accurate and up to date record keeping, particularly relating to the payment of employees. The FCA has recently imposed a fine of almost $100,000 on a former Caltex franchisee (Mr Dagher) who was found to be falsifying the wage records of migrant workers.
As part of an FWO audit, Mr Dagher was ordered to produce all relevant employment contracts and payslips. Upon reviewing these documents, the FWO became concerned that the company records were inconsistent with the actual amounts paid to employees. During the court proceedings, Mr Dagher admitted that the reason for these inconsistencies was that he had falsified documents and records.
The FCA imposed the highest ever penalty for record-keeping and payslip breaches of $16,038 personally for Mr Dagher and $80,190 for his company, Aulion Pty Ltd. These penalties were 90% of the maximum available penalty, serving as a warning that higher penalties for record keeping breaches are now both possible and likely under Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (the Act) which was introduced in September last year.
The proceedings against the franchisee were initiated after the 2017-18 Fair Work Ombudsman (FWO) investigation into 25 Caltex stores relating to underpayment and non-compliance. Only 6 of the 25 stores investigated were found to be compliant, reflecting a non-compliance rate of 76% for the franchisees.
The investigation found that 17 of the 23 franchise operators were from non-English speaking backgrounds, with minimal knowledge or experience of Australian workplace laws. This had made low-skilled employees more vulnerable to exploitation in a competitive market. The increased sanctions in the Act aimed to offer greater protection to this category of worker. Fair Work Ombudsman Natalie James stated:
“Caltex should have recognised this in its business model by ensuring franchisors properly understood their obligations and conducted monitoring to assure itself that obligations were being met.”
As a result of these findings Caltex has made a commitment to bring all of its petrol stations under company control by 2020. If you have further questions relating to employer obligations involving keeping accurate and up to date wage records please contact Nick Stevens, Jane Murray or Angharad Owens-Strauss.