Underpaying employees cost company over $570,000!

The Federal Circuit Court has ordered a company and its Director to pay over $570,000 in penalties and underpayments.

Facts: A company has been found to have underpaid 23 employees over a period of eighteen months. Evidence was produced showing that the company decisively sought out young and vulnerable employees. Some of these employees were recruited immediately after University. Judge Young stated, “I am satisfied that there was an element of exploitation involved with young employees that would have been less likely to occur with older or more experienced employees.”

The company also breached workplace laws by falsifying PAYG records provided to the Fair Work Ombudsman inspectors, purporting that the amounts employees were being paid were correct.

Finding: A total penalty of $264,924 was issued to the company and its director for underpaying the employees. The company was also ordered to back-pay the 23 employees a total of $305,780, with the largest underpayment amounting to $48,217.

Liability: In this case, the Director received an individual penalty of $44,604 for breaching workplace laws. This sum formed part of the total $264,924 issued in penalties. Ms Parker of the Fair Work Ombudsman stated, “any employer tempted to underpay young workers for their own benefit should think again because we will do everything within our power to ensure such conduct is met with significant consequences.”

Compensation and Penalties:

·    $ 305,780 in underpayments;

·     $ 220,320 in penalties for breaching workplace laws to be paid by the company;

·     $ 44,604   in penalties for breaching workplace laws to be paid by the Director.

Courts are progressively issuing high penalties for employers and businesses who breach workplace laws and try and hide their conduct by falsifying records.

Disclaimer: The information contained this article is general and intended as a guide only. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this update, Aitken Legal does not accept liability for any errors it may contain. Liability limited by a scheme approved under professional standards legislation.