A plumbing company has been fined $100,000 and its director fined $21,500 for underpayments of wages totalling $26,882 to a 20 year old “apprentice”.

In the case of Fair Work Ombudsman v Pulis Plumbing Pty Ltd & Anor [2017] FCCA 3013, the employee was engaged as a second year apprentice and paid an apprentice rate of $12.18 an hour, despite the apprenticeship not being registered with the relevant State authority. The employer had previously been advised by the Fair Work Ombudsman that it was required to pay labourer rates (ordinarily $37.08 per hour) rather than apprentice rates if the apprenticeship had not been registered.

In only three months of employment, the employee was underpaid $26,882. This included:

  • the difference between the apprentice and labourer rates of pay for ordinary hours of work;
  • overtime payments;
  • ordinary payment for a day off on public holidays;
  • meal allowances when working overtime;
  • personal/carer’s leave;
  • accrued but untaken annual leave on termination of employment;
  • annual leave loading; and
  • travel allowances.

When the employee later chased up these payments and asked by text message when payment would be made, the response from the director of the company was ‘Seriously, f--- off. When I’m ready’.

A significant challenge for the employer in this case was that it had not kept any records of the hours worked by the employee. This meant that it had no way of disputing the claims for overtime and related allowances made by the employee.

Amendments to the Fair Work Act 2009 (Cth) (Act) that came into effect in September 2017 place a reverse onus on employers to disprove an allegation of underpayment by employees if the employer has not kept required records. Employers are required to keep a number of records relating to the employment of an employee such as payments made to employees and hours of work.

In this case, as the employer had no records of hours worked by the employee, it had no way of disputing the employee’s claims.

Other records employers are required to keep include details such as;

  • industrial instrument coverage;
  • leave records;
  • where relevant, as to the manner in which and by whom the employment was terminated;
  • superannuation payment records, including any choice of fund nomination, and;
  • the nature of the employment (i.e. full-time, part-time or casual).

Employers need to keep records for at least seven years, even if an employee has left employment, as employees have six years to commence underpayment proceedings.

On its own, an employer’s failure to keep required employee records can attract a civil penalty, with a maximum penalty of $63,000 for a corporation and $12,600 for individuals per breach.

In the Pulis Plumbing case, and as often occurs in underpayment situations, there were multiple contraventions of the Fair Work Act by both the company and its director, which resulted in the penalties of $100,000 for the company and $21,500 for the director. The director’s rude response to the employee’s queries about non-payment of entitlements also influenced the quantum of the penalties imposed.

Since September 2017, a further amendment to the Act is that a Court can declare a contravention of the Act to be a “serious contravention” and impose increased penalties up to $630,000 per contravention for companies and $126,000 per contravention for individuals. A “serious contravention” occurs when:

  • the person or business knew they were contravening an obligation under workplace law; and
  • the contravention was part of a systematic pattern of conduct affecting one or more people.

In determining whether the conduct is part of a systematic pattern of conduct, a court may have regard to:

  • the number of contraventions (the relevant contraventions) of the Act;
  • the period over which the contraventions occurred;
  • the number of other people affected by the contraventions;
  • the response, or failure to respond, to any complaints made about the contraventions;
  • the circumstances that led to a failure to comply with employer record keeping requirements; and
  • the circumstances that led to a failure to provide payslips within one working day of payment.

Lessons for employers

The key (and obvious) learning for employers from the decision in Pulis Plumbing is to:

  • keep employment records that comply with statutory requirements;
  • promptly, politely and meaningfully respond to pay issues raised by employees; and
  • if engaging apprentices or trainees, register the arrangement with the relevant State or Territory body before paying reduced rates applicable to apprentices or trainees.