The Federal Court of Australia has recently ordered significant penalties against a travel consultancy business (the Company) and its sole director in Melbourne’s suburbs after being found to have knowingly and intentionally breached provisions of the Fair Work Act.
The Fair Work Ombudsman brought proceedings in the Court against the business and its director for sham contracting and failure to pay minimum entitlements. The proceedings arose from a complaint from a worker of the business who had been required to sign a contractor’s agreement and paid a flat hourly rate of pay of between $9 and $11. This is despite the fact that the worker was clearly a casual employee and that her employment was covered by the General retail Industry Award 2010. The worker was aged 24 and from a non-English speaking background.
It was agreed that the arrangement breached the sham contracting provisions under the Fair Work Act 2009 and further that there was a failure to pay minimum hourly rates; casual loadings; weekend and public holiday loadings; and a failure to make superannuation contributions. The worker was underpaid $16,750.00 over an eight month period (almost half of what her entitlements were).
In its decision the Court ordered penalties against both the Company and the director in the sums of $192,840.00 and $35,496.00 respectively. This was over half of the maximum penalties available. When considering the appropriate penalties the Court deemed that the contraventions were deliberate and that the Company and its director had exploited the workers vulnerability.
The case serves as a timely reminder for employers to avoid sham contracting arrangements and to provide employees with their minimum entitlements. For expert advice on contractual arrangements and employee entitlements please call one of our expert legal advisors.
Nathan Job (Solicitor)