The operator of a popular spa centre in Sydney has been ordered to back-pay $65,939.87 to 13 employees, after admitting he made unlawful deductions from their salary, underpaid penalty rates, and underpaid annual leave entitlements.
The FWO investigated the spa operator after receiving multiple requests for assistance from two skilled 457 visa holders, who alleged the company was making deductions from their pay to cover their visa-related costs.
Between May 2014 and February 2018, Fair Work inspectors found the company had made unlawful fortnightly deductions from the pay of thirteen 457 visa workers, totalling $58,025.
The company director had consistently deducted $250 per fortnight from the workers’ pay and stopped once the costs of the workers’ visa sponsorship process had been reached, which was as much as $7,000 for an individual worker. The withheld amount was promised to be repaid to the workers after they completed a specified employment term with the business.
The underpaid employees were foreign nationals from various countries including, Ireland, Britain, Poland, and Japan.
The FWO also recovered $7,914.87 in unpaid penalty rates and annual leave entitlements. The company has back-paid all workers in full for the unlawful deductions and underpayments, and has co-operated fully with FWO throughout the investigation process.
The company director signed a court-enforceable undertaking (EU) with the Fair Work Ombudsman (FWO) after admitting to breaching workplace laws.
Fair Work Ombudsman Sandra Parker said deducting pay from workers’ salary was only allowed in limited circumstances and must be principally for their benefit.
“Businesses can’t use deductions from workers’ salaries as a bargaining chip to keep them employed in the business,” Ms Parker said.
“This significant back-payment bill should also serve as a warning to all employers that it is not acceptable to underpay migrant workers, or make unlawful deductions. Employers who do this will get caught.”
Senior Employment Relations Adviser at Employsure, James Houghton says underpayment is a big issue right now, with, “more pressure than ever being placed on businesses to correctly pay their staff. Sometimes underpayment is deliberate, other times it’s accidental — but whatever the cause, the outcome is the same: intense scrutiny and hefty fines from the Fair Work Ombudsman.”
Mr Houghton says employers need to stay informed and get regular specialist advice: “to best protect business, it is vital for employers to have a good understanding of the interaction between the National Employment Standards, the applicable Modern Award and how it works within their business. Wage rates and obligations also update from time to time, particularly around the new financial year on 1 July, and it is the employer’s responsibility to keep up to date with any changes.”
Under the EU, the spa operator has been ordered to implement audits across its six spa centres across the state to ensure their employees are receiving their correct entitlements.
The company must also ensure all their managers complete workplace relations training, and will also make a contrition payment of $10,000 to the Commonwealth Government’s Consolidated Revenue Fund.