The Federal Circuit Court (FCC) has ruled on the Fair Work Ombudsman’s (FWO) first‑ever age discrimination case. The Court has ordered $39,150 in penalties against an employer, following the dismissal of a hospitality worker for reaching the retirement age of 65.

The facts

Mr Lee worked as a full-time food and beverage attendant for 15 years at a Thai restaurant on the Gold Coast. Mr Lee took 13 weeks of long-service leave and, upon his return to work, was told that he could only work part-time. A meeting was held between one of the company’s directors and Mr Lee, where Mr Lee expressed his concerns about the decision to shift him to part-time work, as well as alleged outstanding pay and entitlements.

Following the meeting, a number of letters were exchanged between the restaurant operators and Mr Lee. On 16 August 2011, Mr Lee received a letter, drafted by the company’s accountant, which stated:

It is the policy of the Company that we do not employ any staff that attains the retirement age which in your case is 65 years. We believe you will attain that age on 5th September 2011 at which time your employment will cease because of your age.

Even though Mr Lee expressed his willingness to return to his full-time position, the restaurant operators said they did not wish to enter into further correspondence with him.

Following an investigation, the FWO initiated a prosecution against the restaurant operators in the FCC. The FWO alleged the restaurant operators had contravened the anti-discrimination provisions of the Fair Work Act 2009 (Cth) (FW Act).

Prior to the trial, the restaurant operators conceded they were liable for discrimination on the basis of age, therefore, the only matter for the Court to decide was an appropriate penalty.

The decision

Justice Burnett held that Mr Lee had suffered both economic and non- economic loss due to the discrimination. 

The decision

Justice Burnett held that Mr Lee had suffered both economic and non- economic loss due to the discrimination.

If his role had not been terminated, it was held that Mr Lee would have continued to work on a full time basis. Additionally, His Honour stated that the restaurant’s contraventions of the FW Act had an “inherently serious impact” upon Mr Lee, who was regarded as a vulnerable worker due to his age and English being his second language.

Justice Burnett stated that this case “reflects a general misunderstanding within the community about retirement and retirement age” and that, contrary to public perception, the law aims to protect employees that desire to work beyond such age.

In crafting their policies and correspondence to Mr Lee, the restaurant operators had relied on the advice of their accountant, who was not appropriately qualified to make the determination. Justice Burnett described this advice as “patently incorrect”. His Honour stated that the accountant had failed his client and,  consequently, the restaurant operators ought to now pay the price that would “constitute a hard learned lesson”.

The Court ordered the restaurant operators to pay the following penalties:

  • $10,000 to Mr Lee for loss suffered; and
  • a total penalty of $29,150 for contraventions of age discrimination and record-keeping laws.

Bottom line for employers

The severe financial penalty for the employer in this case reinforces the serious consequences for employers who discriminate against vulnerable employees on protected grounds. Grounds for discrimination under the FW Act include age, pregnancy, race, colour, physical or mental disability, sex, sexual preference, marital status, family or carer responsibilities, religion, political opinion, national extraction or social origin.

Employers need to be aware of and adhere to the applicable employment and discrimination laws when drafting policies, contracts and making decisions that affect their employees. As emphasised by Justice Burnett here, ignorance of the law is no excuse for non-compliance with legal obligations. For this reason, it is important that employers seek and act upon appropriate advice from suitably qualified internal and external advisors that have  the requisite experience and knowledge of workplace relations matters.

This case also demonstrates that employers who fail to obtain appropriate advice and then act upon it contrary to the law can face severe penalties and consequences.