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‘Deliberately ignoring’ Ombudsman warnings results in record penalty

August 10, 2017

By Alexander Millman and Angela Szczepanski, NRA Legal 

FWO v MHoney Pty Ltd & Anor [2016] FCCA 2959

In November last year, Judge Burchardt of the Federal Circuit Court in Melbourne found that MHoney Pty Ltd and its director, Mr Abdulrahman Taleb, had deliberately engaged in multiple serious and deliberate contraventions of the Fair Work Act 2009 (Cth) by failing to pay an employee, Mr Jamal Kazemi, in accordance with the General Retail Industry Award 2010 (the Retail Award).

This was despite multiple press releases from the Fair Work Ombudsman announcing that it was paying particular attention to markets and migrant workers.

Background

Mr Kazemi arrived in Australia from Afghanistan in 2010, and he first worked for the respondent employer (a Melbourne fruit market owner) in early 2012. On first commencing he was told he would be paid $120 a day and work from 6:00AM to 7:00PM, seven days a week.

For the first three weeks of his employment, Mr Kazemi was not paid any wages. When he questioned this, he was told that his wages were withheld as a ‘bond’ to pay for any damage he may cause in his employment, and would be returned to him (less any amounts to pay for damage) at the end of his employment.

Mr Kazemi was never allowed to take rest or meal breaks, being told that the store was too busy to allow for them and “if you don’t like it, leave”.

Mr Kazemi then left that employment in May 2012 to go to Pakistan, but was assured he would be given work upon his return.

Mr Kamezi returned to work for the respondent employer in December 2012, under the same terms and conditions of employment. However, Mr Kazemi was not paid the full amount of his wages under that arrangement during this second period of employment. Because of this shortfall, Mr Kazemi made a complaint to the Fair Work Ombudsman.

The view of the Court

Mr Kazemi’s complaint to the Ombudsman alleged that he was owed $7,200, on the assumption that his arrangement of $10 per hour was valid. As it transpired, the amount of the underpayment claimed on his behalf by the Ombudsman was $25,588.

This underpayment arose out of multiple breaches of the Retail Award and the Fair Work Act, not least of which was the unlawful hourly rate of pay. The breaches included the failure to pay penalty rates, overtime, and superannuation, the failure to pay annual leave on termination of employment, and the failure to keep compliant records.

Separately, the Ombudsman took the respondent employer to task over its failure to comply with a Notice to Produce issued by the Ombudsman.

Judge Burchardt found that the employer had engaged in multiple breaches of the Retail Award and the Fair Work Act, holding that “This was not a properly and lawfully run business. It was conducted in plain breach of a number of workplace regulations.”

His Honour directed the Ombudsman to draft orders to give effect to his judgement, and asked the parties to inform him if there was any controversy around the proposed orders.

Earlier this week Judge Burchardt gave his approval to the orders agreed to between the respondent employer and the Ombudsman. The penalty to which the employer agreed was $660,020, with $644,000 payable by the business and $16,020 payable by the business manager.

This is the highest penalty ever won by the Ombudsman in litigation.

What is important to note is that this penalty was imposed by consent of the employer; it is entirely possible that had the parties not agreed to the penalty, the court may have ordered an even higher penalty.

This demonstrates the upwards trend in penalties imposed on employers who fail to comply with their obligations under fair work laws.


For help in understanding your obligations, call NRA Legal on 1800 RETAIL (1800 738 245).


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