Six figure fine for wages exploitation of a young worker and for failure to keep records for 3 months

The Fair Work Commission has fined a director $21,500 and his company $100,000 for “an outrageous exploitation of a young worker”.

 
A second year apprentice plumber worked more than 200 overtime hours in a three-month trial period with a plumbing business in 2014. He was paid less than $2000. He left the company after an offer of another 3 month trial. After the employment ended he politely asked for payment of his wages a few times and then sent a text to the owner, “Hey, mate, when are you putting the money in my acc?” The owner replied. “Stop doing my head in” and “Seriously, F off. When I’m ready.”
 
The Fair Work Ombudsman (FWO) issued a notice to the employer to produce time sheets however the employer did not or could not produce them.

The Prosecution

The FWO alleged contraventions of the Fair Work Act (FW Act) by the employer and its director for failing to pay entitlements such as ordinary pay, overtime, meal allowance, personal leave, annual leave on termination and annual leave loading on termination.

The FWO also alleged:
  • Failure to comply with a notice to produce
  • Payslip contravention
  • Failure to make and keep records
 
The Fair Work Commission (FWC) accepted the evidence kept by the worker of the hours worked and specifically noted section 536 of the FW Act which provides that an employer that fails to keep time sheets and provide pay slips has the burden of disproving an employee’s claim about hours worked and payments made.

In a clear warning about the importance of record keeping, the FWC said, “In a case such as this, I would have been prepared to accept even generalised estimates from the employer as to his hours. In the circumstances of this case, his diary entries amount to good evidence which I have no hesitation in accepting.”

The FWC also noted that even though the employer was a small business it had already received specific advice about the correct rates of pay.

Implications

Some lessons learned the hard way by the employer were to:

  1. Take more care in everyday language and text messages, which may make an already difficult case worse!
  2. Don’t allow wages disputes to remain unresolved - rectify mistakes early and well.
  3. Always keep the minimum employment records required by the Fair Work Act such as records of overtime hours worked and pay slips.
  4. Take extra care with young and vulnerable workers to ensure that minimum employment entitlements are properly paid.
 
Although that was a clear case of non-compliance, we realise that our employment system is complex and many employers are genuinely confused about what pay entitlements and obligations may apply to their businesses. Our employment lawyers have plenty of experience in helping employers to navigate and understand the employment law system, and if your business requires assistance please contact one of our employment law experts.