Fair Work Ombudsman Takes Action Against Underpayment of Employee Entitlements

Apr 22nd, 2022

A removalist and storage business in Western Sydney is currently in hot water with the Fair Work Ombudsman after a $29, 500 penalty has been secured against them in the Federal Circuit and Family Court.

An employee was engaged in a clerical position covered by the Clerks – Private Sector Award 2020 from November 2020 to January 2021. The FWO formed the belief the employee had not been paid any wages for part of her employment period that she was entitled to receive under the National Employment Standards and the Clerks – Private Sector Award 2020.

Beyond merely not receiving their wages, they were also not paid their untaken accrued annual leave entitlements at the time her employment was terminated. It’s also important to note that employees covered by this modern award also have an entitlement to annual leave loading of 17.5% of the hourly rate when taking a period of annual leave. This must also be paid out upon termination if they would have otherwise received it for a period of leave during the course of their employment.

The FWO initially issued a Compliance Notice to the business in May 2021 after their investigation – this required them to calculate and rectify these underpayments in full, including superannuation and the accompanying interest.

However, when the business refused to comply, the matter was escalated to the Federal and Circuit Court. As a result, the business has also received a $29,500 penalty for refusing to comply, and been ordered by the court to take the actions required by the Compliance Notice.

This business is not the only one recently to have refused to respond to a Compliance Notice – a chauffeur business in Adelaide has been ordered to backpay an employee’s entitlements, including superannuation and interest. They have also received a penalty for their refusal to comply.

It is a warning to businesses that fail to take meaningful action in reply to these Compliance Notices.

The FWO is available to respond to anonymous requests for assistance, and indeed this is what prompted them to investigate both the aforementioned removalist and storage business, and the chauffeur business.

Last week they performed surprise inspections of 15 bubble tea stores across New South Wales, Victoria, Queensland, and the ACT in response to reports and enquiries from employees. Stores were also targeted due to previous histories with compliance. These concerns were largely surrounding underpayment issues with respect to employees merely receiving a low flat rate of pay. 

One of the key factors that prompted this investigation was intelligence and previous history that a large proportion of the employees at these bubble tea stores are visa holders. History has shown that visa holders are a demographic that is particularly vulnerable to the abuse of their workplace rights and missing out on their minimum employee entitlements. 

The hospitality industry continues to be a hotspot for workplace disputes and remains a priority for the FWO, with 36% of anonymous reports in 2020-2021 stemming from the industry.

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