Recent cases show how important it is that employers pay their employees their proper entitlements, whether under the Australian Fair Pay and Conditions Standard, an Award, certified or collective agreement or Australian Workplace Agreement. With the Office of Workplace Services (OWS) actively campaigning and targeting particular industries, there is no better time for employers to 'review the books' and ensure that they are paying all employees their lawful entitlements. Getting it wrong can be very costly.
The Office of Workplace Services
The OWS was established last year as part of the Work Choices reforms. It is an independent body whose main functions include ensuring and enforcing compliance with the provisions of the Workplace Relations Act 1996 (Cth) (WRA) and, when appropriate, prosecuting companies found to be in breach of their obligations. The penalties for breaching the provisions of the WRA are substantial, with companies facing fines of up to $33,000.00 per breach. The OWS is proactive in its approach to enforcement and there does not have to be a complaint lodged against your company in order to receive a visit (or be audited) by an OWS Workplace Inspector.
The following decisions, handed down in February, highlight the importance of employers understanding and complying with provisions of the WRA, particularly those provisions which deal with employee entitlements:
Zeffirellis Pizza Restaurant in the ACT was ordered to pay a total of $50,000.00 in fines and over $5,000.00 in unpaid wages, for failing to pay two employees their entitlements under the applicable Award over a period of approximately three months.
The Court found that the employer had committed a total of eight breaches of the WRA, including failing to pay the employees the correct ordinary rate of pay, weekend work penalty rates and public holiday rates.
Zeffirellis faced a total possible fine of $264,000.00, but the Court reduced the figure, taking into account the overall circumstances of the case, including that there was no evidence to suggest Zeffirellis had blatantly ignored their responsibilities under the WRA.
Pow Juice was ordered to pay $49,500.00 in fines and $5,019.95 for failing to pay wages in accordance with the applicable certified agreement.
The Court found that Pow Juice had underpaid 22 of their employees (most of whom were juniors engaged on a part time or casual basis) by a total of $5,019.95.
Six breaches of the WRA were made out, with a total possible fine of $198,000.00. However, the Court reduced that figure by 75% due to the circumstances of the case.
In the decision of Mason v Harrinton Corporation Pty Ltd, the Company engaged two workers from the Philippines, whose employment was sponsored under working visas. The workers were employed as chefs between August 2005 and October 2005 and their employment was covered by an Award.
The workers were not paid the correct Award hourly rates, they were not paid for all hours and days they worked and they were not paid their accrued annual leave. In total, the employees were owed $4,263.56 and $3,603.93 respectively.
The Court ordered the company pay a penalty of $64,000.00, as well as the unpaid wages.
Lessons for Employers
The financial penalties that may be imposed following a successful prosecution can be severe. The Courts are adopting a deterrent approach in imposing penalties and a ‘misunderstanding’ of the law is not a sufficient explanation for a breach of obligations. Therefore, it is important that employers:
are familiar with the industrial instruments under which their employees are paid;
ensure that employees are paid their correct entitlements; and
are aware of the consequences for breaching their obligations under the WRA.
It is also important to remember that in addition to the financial penalties, employers prosecuted by the OWS often face negative media attention. This may affect other areas of your business, including productivity, goodwill and, ultimately, profitability.
We can assist you if you are unsure about the correct entitlements owing to your employees. We can also assist you with any dealings you may have with the OWS, including any prosecution for a breach of your obligations.
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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