Most employers try to do the right thing by their employees.
They pay them what they believe are fair wages and have good
But the best of intentions may not protect you from a penalty
from the Fair Work Ombudsman if you have underpaid your employees
or not paid them the correct penalty rates and allowances.
Take this example: Miranda owns a popular bar in the city. She
employs several permanent staff, including her chef and senior bar
and wait staff, as well as a number of casual employees, which
varies from time to time depending on how busy the bar is. Miranda
prides herself on being a good employer, and wants to make sure her
staff are looked after. She speaks to the café next door to
the bar and asks them what they are paying their staff. She decides
to pay her staff a few dollars more than the café next door,
because she appreciates their hard work. She does not have any
employment agreements, but when she told the employees what she
wanted to pay them, none of them objected.
Then Miranda gets an unexpected inspection from the Fair Work
Ombudsman. It turns out one of her employees was not so happy with
what they were being paid, and has made a complaint.
On review, the Ombudsman discovers that while Miranda thought
she had paid her employees well and truly what they were entitled
to, it turns out she was misinformed, and has underpaid her
Not only is Miranda now liable to back pay her employees for
their underpaid wages, penalty rates, overtime, allowances and
superannuation, she may also be open to a fine from the Fair Work
Ombudsman. Even if the bar was owned by a company, if Miranda was
the director of that company, she could also be held personally
In two recent cases, the Fair Work Ombudsman has held both the
company and the directors personally liable for their breaches of
the Fair Work Act in regards to underpayment of wages. In one
particular case, Fair Work Ombudsman v Ohmedia Melbourne Pty Ltd
& Anor  FCCA 50, the director was found liable as they
had not sought advice in relation to their obligations as
employers, which was deemed as "reckless" by the Judge on
It is essential that employers ensure that they are meeting
their obligations to their employees, both in regard to payment of
wages as well as other terms of employment such as working hours.
Pleading ignorance is no defense. If you do not take steps to
ensure you are meeting your obligations you may actually increase
your chance of a penalty, as if you don't know what your
obligations are, you should be finding out.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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