With instances of migrant worker exploitation in Australia becoming an increasingly prominent issue, this decision of the Federal Circuit Court is a timely reminder of the significant penalties that can be ordered in respect of an employer’s failure to comply with its obligations under a modern award and with regard to anti-discrimination.

The first respondent, Yenida Pty Ltd (Yenida) operated a hotel in Tasmania. Mr Chang Yen Chang (Mr Chang) was a director and company secretary of Yenida and general manager of the hotel. As general manager, responsibility for ensuring the hotel complied with relevant workplace legal obligations fell to Mr Chang. It was agreed that, at all relevant times, Mr Chang was aware of his obligations to pay entitlements under the relevant awards.

Yenida employed around 20 employees, all of whom were Australian with the exception of Kien Hoong Loh (Mr Loh) and his wife Kah Yoon Low (Ms Low), a Malaysian couple of Chinese descent who moved to Australia to work at Mr Chang’s hotel.

Mr Loh accepted a position as a full-time chef in 2007 and continued to work for Mr Chang until he resigned in 2014. Ms Low subsequently followed Mr Loh to Australia and was employed as a kitchen hand on the same basis as Mr Loh. Both Mr Loh and Ms Low worked lengthy hours, six-days per week and in return received a flat rate for their work, well below the award minimum. Ms Low quit after 4 months due to the heavy work load. In contrast, the Australian employees worked less hours and were paid a base salary, casual loading, penalty rates and loadings largely in accordance with the award.

The Fair Work Ombudsman (FWO) argued that Mr Chang relied on his common national extraction with the husband and wife to manipulate them into working longer hours for significantly less remuneration than Mr Chang’s Australian employees.

The Federal Circuit Court (FCC) found that Mr Chang breached the racial discrimination provisions of the Fair Work Act 2009 (Cth) (FW Act) by underpaying them a total of more than $28,000 and requiring them to work additional hours in contrast to their Australian colleagues.

In penalising Yenida $176,005 and Mr Chang a further $35,099 for the breaches, the FCC found that Yenida took adverse action against both Mr Loh and Ms Low by discriminating between them and the company’s Australian employee’s, resulting in injury to the couple.

The Court accepted the FWO’s submissions that Mr Loh and Ms Low’s national extraction was a ‘substantial and operative reason’ for their employment and subsequent exploitation, with Mr Chang showing a complete disregard for his duties as an employer. In relying on their shared cultural connection, Mr Chang repeatedly referred to the couple as ‘family’ to put pressure on them to work harder and longer hours. Judge Baker of the FCC concluded that Mr Chang’s failure to keep accurate records as prescribed by the Fair Work Regulations 2009 (Cth) further evidenced his disregard toward Mr Loh and Ms Low.

The combined penalty of $211,104 also took into account numerous award breaches in respect the Australian employees over a number of years.

The FWO has used the successful outcome to send a powerful message to employers making decisions based on race: the FWO can and will seek penalties for workplace discrimination. Fair Work Ombudsman, Natalie James, has stated “All workers in Australia are entitled to our minimum wages, irrespective of their background, language skills or visa status. We are actively seeking to dispel the myth that it’s OK to pay overseas workers a ‘going rate’ that undercuts the lawful minimum wage rates that apply in Australia… we will do so via court action if necessary.”

The FWO has also highlighted deterrence as an important consideration for pursuing employers such as Yenida and Mr Chang, indicating that they would continue to seek tough penalties for those in breach of their obligations.

Employers must ensure that all employment decisions and practices are in accordance with the FW Act, any relevant modern award obligations, and are non-discriminatory in nature.