Massive $200,000 fine for underpaying workers a timely reminder for employers to understand and apply correct industrial awards

Massive $200,000 fine for underpaying workers a timely reminder for employers to understand and apply correct industrial awards

The Federal Court has fined a company almost $200,000 for underpaying its aged care workers by more than $2.5 million over a five year period, finding that its unlawful employment practices might have given it an unfair competitive advantage.

Between March 2006 and February 2011, the retirement village operator employed workers to monitor emergency pagers for its residents.

Some of the pager monitors only worked for the company on weekends, and were paid a flat $50 rate for an 8-hour or 16-hour shift. They received an additional $50 each time they were required to call an ambulance.

Others worked in the retirement villages during the day in paid roles, and filled in as page monitors on weeknights. They were not paid anything for this work, but were provided with on-site accommodation and given time off their day jobs as compensation for actually responding to a pager.

The Fair Work Ombudsman initially took the company to court for underpaying 35 workers, but media publicity flushed out 11 more, which it then included in the application.

The employer initially denied that the employees were performing “work”, except when responding to a call-out.

But it eventually admitted that it had breached its obligations under the former Workplace Relations Act to pay the workers their minimum hourly rate and casual loadings, and that in respect of one employee had contravened the maximum hours of work guarantee.

It also agreed that from the start of 2010 it had breached the Aged Care Award by failing to pay minimum wages, annual leave loading, overtime, shift, weekend and public holiday penalties.

In 2013, the company repaid the workers their full entitlements totalling more than $2.5m, including $70,000 that fell outside the six-year limitation period.

The judge said “substantial penalties” were warranted in the case, settling on a total of $196,000, just under 50% of the maximum. He said the company might have enjoyed a “significant competitive advantage” as a result of the contraventions.

“The breaches may have allowed [the company] to differentiate itself from its competitors by being in a position to offer lower fees and provide superior services by having a staff member present 24 hours a day,” he said.
While the underpayments were not deliberate, the company had “failed to adequately consider its proper obligations to its employees, including in the face of significant reforms to the industrial relations system over time”, the judge said.

The employer told the court it had received advice from industry association Business SA about its arrangements, but the judge said the employer group had not specifically told the company that the employees were not working while they waited to respond to the pagers.

The consequences of paying incorrect award wages can be severe. iHR’s consultants offer sound advice and practical HR support for any organisation or employer dealing with high risk human resource, workplace relations and industrial relations issues.

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