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300k Penalty for False Records and Underpayment

Two Queensland based restaurant operators have been fined a total of almost $300,000 for having intentionally underpaid a number of their employees, most of whom were working in Australia under a working holiday visa. In addition to the underpayments, it was found that both employers had also deliberately provided fabricated employment records to the Fair Work Ombudsman.

Investigation into the employers’ practices identified that the two employers had systematically underpaid up to nine employees. It was found that the employees were being paid on a cash in hand basis at a rate of between $8 and $10 per hour each. In comparison, the applicable minimum award rate which would have applied at the time of the payments having been made were $17.35 per hour for employees classified as kitchen attendants and $18.02 per hour for employees engaged under the cook classification as per the Restaurant Industry Award 2010.

In addition to paying their employees a rate that was significantly less than the applicable minimum award rate, both employers had also deliberately failed to their employees the following entitlements:

·         Superannuation entitlements.

·         Applicable loadings for performing hours of work on weekends and/or public holidays.

·         Applicable allowances for hours worked at night and/or during early mornings.

·         Casual loading (for their casual employees).

On two separate occasions, the employers had been requested by the Fair Work Ombudsman to provide documentary evidence and records to support that they were in fact paying their employees correctly. On each occasion, falsified records were provided to the Ombudsman and incorrect claims were made regarding both the actual hours that were being worked and the rates of pay being paid.

It was found that the practices of the two employers had resulted in an underpayment of $59,080 in total having been made during a four month period. The Fair Work Ombudsman determined that each of the nine employees were actually being paid up to less than half, of what they were otherwise entitled to be paid under the Restaurant Industry Award 2010.

The attempts by both employers to provide falsified employment records, combined with the identified record-keeping violations were described by the Court as being “a most heinous offence”. As a result of the seriousness of these offences, a maximum penalty of $18,000 each was imposed for both employees for having made and producing two separate sets of false and fraudulent records.

For having breached the Fair Work Act 2009, one employer was fined a total of $246,400, while the second employer received a $38,000 fine.  In recognition that the employees affected had since been back paid the entitlements that they were owed in full, the Court chose to reduce the size of the penalties imposed by 20%.

The findings in this particular case again makes it clear that minimum wage rates which apply under an applicable Modern Award or the Australian national minimum wage are non-negotiable and must be provided for all employees.

While most employers are doing the right thing by complying with the applicable award/s that apply to their workplace, and are maintaining thorough records, the recent legislative changes mean that those employers who are intentionally breaching both employment and record-keeping requirements run the risk of receiving even more significant penalties in the future.

Should you have any questions regarding the minimum wage which applies to your employee’s or your employment record keeping obligations, please do not hesitate to contact your team at HR Advice Online. 

Information in HR Advice Online guides and blog posts is meant purely for educational discussion of human resources issues. It contains only general information about human resources matters and due to factors such as government legislation changes, may not be up-to-date at the time of reading. It is not legal advice and should not be treated as such.

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