Brisbane business cops $400,000 fine for staffing breach: Is your company at risk?

A record penalty recently handed to a Brisbane business owner comes as a timely reminder for employers to ensure all employment contracts fully abide by Australian workplace law. Employers need to be fully aware of their obligations under the current Fair Work Act, to ensure they do not attract an expensive fine.

An owner of a Brisbane convenience store has recently received a penalty in excess of $400,000, after a Federal Circuit Court Judge found he was liable for the exploitation of staff.

The case, brought forward by investigators for the Fair Work Ombudsman, found that 12 staff had been collectively underpaid over $82,000. Workers at the store in West End were paid $13 per hour, the investigation revealed.

The penalty included fines imposed by Fair Work Australia, in addition to the total sum in unpaid wages the court ordered be paid. The case is part of a number of actions being undertaken at present by the Fair Work Ombudsman to address systematic exploitation of staff at this particular franchise Australia-wide.

These actions should send a clear message to employers that Fair Work investigators are treating cases of employee exploitation very seriously; and furthermore, that they have the support of government legislators and the courts.

As this particular ruling illustrates, employers need to be aware that irrespective of the pay agreement they might have established with an employee. This is the case even if you have clearly outlined, mutually agreeable terms in an employment contract: if those terms are in breach of the law, the employer could face significant fines.

Organisations should note that the maximum penalties for failing to comply with a breach of the Fair Work Act 2009 (Cth) were increased in 2015. The maximum corporate penalty has been raised from $51,000 and now stands at $54,000. Meanwhile, the fine for an individual found responsible for a breach has also risen, from $10,200 to $10,800.

Given the growing trend in adverse action claims to name specific individuals responsible for a breach, fines are often awarded to both those individuals and the company as a whole, as the penalty imposed in the above-mentioned case illustrates. While the owner of the franchise business in West End was penalised $68,058, his company also received a fine to the sum of $340,290.

With employers facing these kinds of penalties it is clearly very important that all organisational leaders are aware of, and fulfil, their obligations to staff, as established under the current Fair Work Act.

Ensuring that workplace conditions do not contravene any part of the Fair Work Act begins with the employment contract.

Above all, contracts must clearly state the provision of the job, the pay rate and conditions, as by ensuring all workplace agreements are in line with the law, you can avoid incurring a very expensive financial penalty. iHR Australia offers services that include the review of existing contracts or development of new contracts for your organisation.