Toy retailer to face increased fines for underpayment of staff

By Portner Press on June 12th, 2019
  1. Industrial Instruments
  2. Fair Work Act

The Fair Work Ombudsman (FWO) will not toy around with employers who think they can flagrantly flout employment laws by preying on vulnerable workers.

Melbourne toy retailer IE Enterprises Pty Ltd, trading as Uncle Toys, and its director Eyal Israel are now facing penalties which could exceed $3 million for the alleged underpayment of eight international temporary visa workers.

This is the first legal action the FWO has launched under the Fair Work Act’s serious contraventions provisions of the Protecting Vulnerable Workers laws.

Under these laws, which were introduced in September 2017, companies and individuals can face maximum penalties that are ten times the current maximum penalties.

Companies can be fined up to $630,000 per preach, while individuals can receive fines of up to $126,000 per breach.

The FWO alleges that Mr Israel, who ran eight Uncle Toys pop-up stores in Melbourne suburbs, underpaid eight employees.

He paid his employees from as little as $6.70 per hour and did not pay some employees at all for some of the hours they worked.

The alleged underpayments of individual employees, who were from countries including Malta, the Netherlands and Korea, ranged from $395 to $5,041, totalling $21,748. These underpayments have not been rectified.

The employees, who were mostly aged in their 20s, were allegedly underpaid for between one and nine weeks’ work they undertook between October 2017 and January 2018.

The FWO has received requests for assistance from former IE Enterprises employees over the last several years. IE Enterprises had previously been issued with a letter of caution by the FWO and was supplied with education materials, pay guides and notices to produce employment documents.

Sandra Parker of the FWO says the Protecting Vulnerable Workers legislation was enacted to respond to community concerns about the exploitation of employees in Australia.

“This is the first time the Fair Work Ombudsman will be relying on the new serious contraventions provisions in court, which carry maximum penalties ten times higher than traditional contraventions,” Ms Parker said.

“We’re arguing that five alleged contraventions are serious because Uncle Toys and its director failed to correct the non-compliance, despite extensive engagement with us.

“We’re also utilising new reverse onus of proof provisions that require employers to disprove underpayment allegations in court if they have failed to adequately comply with time-and-wages records and pay slip obligations.

“The Fair Work Ombudsman offers free workplace advice to employers and employees. We encourage anyone with concerns about their workplace rights or obligations to contact us.”

The employees who were paid low, flat rates and not paid at all for some work, were entitled to minimum rates for ordinary hours, casual loadings and the weekend and public holiday penalty rates under the General Retail Industry Award 2010. One employee allegedly had an unlawful deduction made from their wages.

The FWO alleges that the five serious contraventions against the employer relate to minimum wages, failure to issue pay slips, failure to keep records, failure to pay employees in full and making an unlawful deduction.

For each serious contravention, IE Enterprises and Mr Israel could face maximum fines of up to $630,000 and $126,000 respectively.

Further to these contraventions, the FWO also alleges that the employer provided three employees with false and misleading payslips that contained the wrong business name and an invalid ABN. For each of these breaches, the penalties are up to $63,000 for the company and $12,600 for the individual.

The FWO is also seeking a court order requiring the employer to back-pay the employees in full.

A directions hearing is listed in the Federal Circuit Court in Melbourne for August 2.

Getting pay wrong can be extremely costly

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Read chapters A3 Modern Awards and T2 Time and Wages Records in the Employment Law Practical Handbook to ensure you have met all of your obligations

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