Iconic Sydney restaurant chain Mamak has been unsuccessful in defending an application made by the Fair Work Ombudsman (FWO) on behalf of six employees. In the case, Fair Work Ombudsman v Mamak Pty Ltd & Ors [2016] FCCA 2104 a Mamak and its three directors and shareholders (Joon Hoe Lee, Julian Lee and Alan Wing-Keung Au) were found to have failed to pay correct wages and otherwise contravened the Fair Work Act 2009 (Cth) (Act).

Judge Smith of the Federal Circuit Court of Australia has ordered Mamak to pay AUD184,960 in penalties, Mr JH Lee pay AUD36,992 and both Mr J Lee and Mr Au pay AUD35,360 each in penalties. His Honour also ordered that Mamak engage a third party with accounting or workplace relations qualifications to audit their compliance with the Act and the Restaurant Industry Award 2010 (Award). Within 30 days of the audit's completion, Mamak must provide the FWO with details of any further breaches and the steps it is taking to rectify those breaches.

Judge Smith concluded Mamak had deliberately underpaid six employees at one of its Sydney restaurants by more than AUD87,000 between February 2012 and April 2015. Mamak did not pay the six employees the correct minimum rate of pay, casual loading, penalty rates (for weekend, evening and public holiday worked) and for one of the employees the applicable junior rates of pay under the Award.

Mamak also:

  • failed to keep employee records as prescribed by the Fair Work Regulations 2009 (Cth) (Regulations);
  • maintained and supplied false and misleading employee records (upon being audited by the FWO in 2013);
  • did not ensure its payslips included information as required by the Regulations; and
  • failed to make available a copy of the Award to employees.

Judge Smith concluded that the three directors were involved in the breaches of the Act, noting "The point here is that all of the respondents knew that there was an award but deliberately chose to ignore it in order to maximise profit."1

Providing false records in response to a 2013 audit by the FWO was very serious and Judge Smith commented doing so was a deliberate diversion of the FWO.

What to remember

Employers must ensure payments are in compliance with any relevant industrial award unless their employees are governed by an enterprise agreement or individual flexibility arrangement in place (which has passed the better off overall test). Employees may contact the FWO regarding compliance if they have doubts, which then investigates, or employees may apply to the courts directly.

Employers are required by the Act and Regulations to maintain employee records containing:

  • the employer's and employee's name;
  • whether the employee's employment is permanent, temporary or casual and whether they are full-time or part-time;
  • the date on which the employee's employment began; and
  • the Australian Business Number (if any) of the employer.

Employers must provide pay slips to employees within one working day of paying wages to employees which contain:

  • the employer's and employee's name;
  • the period to which the pay slip relates and the date on which the payment to which the pay slip relates was made;
  • the gross and net amounts of the payment;
  • any amount paid to the employee that is a bonus, loading, allowance, penalty rate, incentive-based payment or other separately identifiable entitlement;
  • the Australian Business Number (if any) of the employer;
  • details of any deduction from the gross pay; and
  • any ordinary hourly rate or in the alternative annual rate of pay the employee is paid.

If the employer is required to make superannuation contributions for the benefit of the employee, the pay slip must also include the amount of each contribution that the employer made or which the employer is liable to make during the period to which the pay slip relates, and the name, or the name and number, of any fund to which the contribution was made.

Breaches of the Act and Regulations may attract payment of monies owed but also imposition of penalties against the employer and any directors. Penalties for a breach of the Act are currently a maximum of AUD54,000 per breach for a body corporate and AUD10,800 per breach for an individual. Penalties for a breach of the Regulations are currently a maximum of AUD18,000 per breach for bodies corporate and AUD3,600 per breach for individuals.