Court sends $100,000 message to underpaying employers

By Charles Power on February 7th, 2018
  1. Industrial Instruments
  2. Modern Awards


The most commonly nominated industry for 457 visa-holders is the cafes, restaurants, and takeaway food services industry. Three of the four most commonly nominated jobs of 457 visa-holders include cooks, café or restaurant manager, and chefs.

And these workers appear to be most commonly exploited by unscrupulous employers, as the following case suggests.

In awarding penalties of nearly $100,000 against a café employing eight people, the Court in Fair Work Ombudsman v Robit Nominees Pty Ltd & Anor (2018) stated there was a need to send a strong message to the restaurant industry, particularly employers of visa-holders.

The message is that employees must be paid their correct entitlements, while employers must keep and provide accurate employment records. Pay slips are not optional features of employment.

From July 2015 to June 2016, the restaurant industry accounted for 11% of all disputes lodged with the Fair Work Ombudsman (FWO). During the FWO’s 2015 National Hospitality Industry Campaign – Restaurants, Cafes, and Catering, the FWO conducted 1,066 compliance activities and found 615 businesses (representing 58% of all those businesses) to be in contravention of the Fair Work Act 2009 (Cth) (FW Act). That campaign led to the recovery of $1,215,212 for 2,752 employees.

The recent case

The recent case dealt with a FWO prosecution of a licensed café who required a cook on a 457 visa to repay nearly $14,000 in cash payments to her employer. The café employed three full-time and five casual employees.

One casual was in Australia on a working holiday visa. She asked the café-owner to sponsor her under a 457 visa after her working holiday visa was due to expire. The employer agreed to employ her under a contract that would commence on the approval of a 457 visa or such other date to be agreed. She would be employed as a full-time cook working 40 hours per week from 5am-1pm on Wednesdays to Sundays, and paid a salary of $56,000 per annum, exclusive of superannuation.

The employee was covered by the Restaurant Industry Award 2010 as a Cook Grade 3 (tradesperson).  The employee began employment after she had been granted a 457 visa but for the next 15 months she worked 54 hours each week as a cook, from 5am-2pm six days a week.

The employer told her it could not afford to pay her whole salary, and that she would need make weekly cash-back payments of $218 from her pay to fund her tax and superannuation contributions. The employee agreed to do this because she was concerned she may lose her job and have to return to Italy.  Over the 15 months the employee paid nearly $14,000 out of her salary.

The FW Act provides that an employer must not directly or indirectly require an employee to spend any part of an amount payable to the employee in relation to the performance of work if the requirement is unreasonable in the circumstances.

The employee was also being underpaid award entitlements and was not being issued with payslips.

In assessing the appropriate penalty to be issued against the employer and its director, the Court observed that the repayment scheme was established in relation to a vulnerable employee to create the false impression that the employee was being paid her lawful entitlements.

The Court penalised Robit Nominees $87,345 and its director $9,720.

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Charles Power
Employment Law Handbook

Could you and your business survive a penalty like that? Let’s agree that you’re not ripping off your employees like in the above case but are you paying them exactly what the law demands?

Don’t know? You must.

Get the Employment Law Practical Handbook, written by legal expert Charles Power, the author of today’s bulletin, and see exactly what you need to paying your workers.

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PS: The Wages chapter is only one of more than 70 chapters covering all aspects of employment law.


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