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$220,000 fine proves minimum wage rate is not “just crazy”

$220,000 fine proves minimum wage rate is not “just crazy” (Last Updated On: July 2, 2015)

A Melbourne travel services operator has admitted to underpaying a vulnerable migrant employee $19,567.00 over a period of just eight months. This underpayment allegedly occurred due to the business operator thinking that Australian minimum pay rates are ‘’just crazy’’.

The 24 year old employee, who was a migrant from China with limited English, submitted a request for assistance to the Fair Work Ombudsman regarding her underpayment and it was found that she was paid an hourly rate of between $9 and $11 an hour to work as a casual travel consultant in 2013. However, under the General Retail Industry Award the employee was entitled to more than $21 an hour for normal working hours, plus penalty rates for weekend and public holiday work.

The employee was found to have been paid less than half of her total entitlements and was also classified as an independent contractor (a breach of sham contracting law). The Fair Work Ombudsman presented evidence that the travel service employees were under constant video surveillance whilst at work, and discouraged from raising concerns about their employment. An email sent to all employees in 2013 advised that they could all be easily replaced and that management paid them to “do the work and not to negotiate any work terms and conditions”.

The Federal Circuit Court has fined the travel service company Grandcity (GW) Travel & Tour Pty Ltd, $192,840. They found that employees of other Gladcity agencies run by businesswoman Na Xu, had previously complained of underpayments and sham contracting, therefore Na Xu was well aware of her obligations and she was fined a further $35,496.

Fair Work Ombudsman Natalie James says a $220,000-plus penalty sends a very clear message to Na Xu and other employers who deliberately set out to deprive employees of their basic entitlements.

Employers need to be aware that simply calling an employee a ‘contractor’ and requiring them to obtain an Australian Business Number (ABN) does not automatically make them a contractor under workplace laws.

Do you need a better understanding of your employees entitlements? Employsure can advise on all aspects associated with employee contracts and more. Call us today on 1300 651 415.

Source: The Fair Work Ombudsman

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