The Federal Circuit Court has sent a clear message to employers about the importance of award compliance and proper record keeping. The court recently imposed a record penalty of $644,000 on a Melbourne fruit market for various award contraventions, and a further penalty of $16,020 on the owner for his involvement in those contraventions.

In that case, the employee was an Afghani refugee with a limited understanding of English and Australian workplace laws. The court found that the employee was:

  • paid nothing for a number of weeks and then a flat rate of $10 an hour to a maximum of $120 per day, despite working very long days;
  • not paid overtime, penalty rates, superannuation or accrued annual leave on termination; and
  • not provided with meal breaks as required by the applicable award.

In addition, the employer failed to provide pay slips or keep employee records as required by the Fair Work Regulations 2009. Judge Burchardt said the evidence pointed to the “business being conducted on a very ad hoc and undocumented basis. The style of the employer records is incomplete and chaotic. No payslips were ever provided. This was not a properly and lawfully run business. It was conducted in plain breach of a number of workplace regulations”.

In addition to imposing record penalties, Judge Burchardt issued an injunction requiring that the owner not engage in any further contraventions of the award or National Employment Standards, and ordered that he be jointly and severally liable for rectifying the underpayments to the employee. This means that the owner will be personally liable to pay the underpayments if the employer fails to do so.

In its media release about this case, the Fair Work Ombudsman, Ms Natalie James said “the record penalties should serve as a warning to employers that those who exploit workers face major financial consequences.”

Given the magnitude of this and other penalties imposed on employers for contraventions of workplace laws, we recommend that employers take the time to review applicable awards, record keeping practices and payment arrangements to verify compliance with applicable laws. Readers who require further information about record keeping obligations should review our previous blog on this issue, which can be found here.