LawTalk Blog

Dodgy employer exploits vulnerable workers and cops $532,900.00 fine for his troubles

Unscrupulous employer fined by Fair Work ombudsman

Many readers will recall the recent investigation into 7 Eleven Supermarkets who, it was discovered, had been significantly underpaying their employees.

The immense publicity that this story generated served to educate many employers of their strict legal obligation to pay their staff at least the rate provided in any applicable modern award. But, as we highlight here, it didn’t get the attention it deserved from one particular employer in the hospitality sector.

As is the case in many avenues of life, some unscrupulous operators have attempted to find a way to “beat the system”. We are happy to report, however, that the Office of the Fair Work Ombudsman (FWO) is “on the case” and is prepared to prosecute employers who attempt to exploit workers; particularly vulnerable workers.

In a recent case the Office of the Fair Work Ombudsman prosecuted an Albury based restaurant and its sole director for its treatment of Australian and overseas workers with its flagrant and deliberate breaches of the law which the restaurant had gone to great lengths to attempt to hide.  

The restaurant had advertised for overseas workers to apply for vacant positions and promised to sponsor them, under current Australian immigration laws, if they were successful. Two Indian men applied for positions and after they successfully completed unpaid work trials (which in itself is actually illegal in Australia), they were offered employment and sponsorship.

The employer provided written contracts of employment that stated that the workers would be paid the correct rates under the relevant modern award; the Restaurant Industry Award 2010. This was designed to persuade the Department of Immigration and the industrial regulator that the restaurant was meeting its obligations as a sponsor and as an employer.

The restaurant kept appropriate time and wage records as required by law and paid the two workers their weekly wages in accordance with the award provisions.

"... behind the scenes, the employer was requiring the workers to pay a significant amount of their wages back to the employer."

However, behind the scenes, the employer was requiring the workers to pay a significant amount of their wages back to the employer.  If they refused to do so the employer threatened violence against them and told them that they would be deported and, at times, physically dragged them to the nearest ATM to force them to withdraw funds and hand them over.

Under these unconscionable conditions, the workers were made to pay over $20,000.00 from their wages over a period of around seven months. After these “repayments” were taken into account the workers were being paid around $6.00 per hour; significantly less than the award rate. This despicable scam, which included false and misleading time and wage records, did not escape the attention of the office of the FWO who commenced investigations.

"Astonishingly, while the FWO was investigating the matter, the employer continued to force the workers to repay portions of their wages!"

Astonishingly, while the FWO was investigating the matter, the employer continued to force the workers to repay portions of their wages! By the time the matter came to trial the employer had stolen (because that is what it was – theft) around $87,000.00 of the workers’ wages.

Unsurprisingly, the Federal Circuit Court was scathing in its criticism of the employer.  The Court ordered the restaurant and its sole director to repay the money which it had taken from the workers, and imposed fines on both the restaurant and its sole director in the total sum of $532,900.00!

"... imposed fines on both the restaurant and its sole director in the total sum of $532,900.00!"

These massive fines should send a strong message to employers that they will pay dearly if they fail to comply with the law and attempt to “cover up” their actions.

At Andersons we applaud the FWO and the Court for taking such a strong stand against exploitation of vulnerable workers. 

If you have any questions about your entitlements at work or modern awards please contact Andersons Employment and Industrial Law team.  


Margaret Kaukas 013.jpg

Get in touch with today's blog writer:
Margaret Kaukas

Special Counsel in Workplace Accidents  and  Employment Law

Please note, this Blog is posted in Adelaide, South Australia by Andersons Solicitors. It relates to Australian Federal legislation. Andersons Solicitors is a medium sized law firm servicing metropolitan Adelaide and regional South Australia across all areas of law for individuals and businesses.


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