Overworked and Underpaid: The reality behind George Calombaris’ Greek tragedy

 

In a brilliant piece of spin worthy of an election campaign, George Calombaris openly admitted to underpaying past and present employees over $2.9 million – and has maintained his positive public image.

 

From the papers to The Project, the popular Masterchef appeared everywhere, apologised for profiting from his workers and continued to accept bookings at his numerous Greek restaurants across Melbourne.

 

You would be forgiven for thinking that it’s all that easy – underpay, apologise, back to business as usual – but be warned, this is the exception, not the rule. 

 

Businesses that are found to breach the Fair Work Act 2009 are liable to penalties of up to $54,000 for corporations, per breach. This means that if you underpay 100 employees, you are liable to 100 lots of penalties. Directors also face penalties of upon $10,800 per breach.  

 

Last year, the Fair Work Ombudsman recovered more than $2.2 million dollars in penalties alone for underpaid employees.

 

For George Calombaris’ Made Establishment empire, the repayments will be made quickly and easily, as the investors in the business have continued to pledge their financial support for the company.

 

Other businesses are not so lucky and have had to enter into voluntary administration after being ordered to back-pay their workers.

 

If you are unsure of how much to pay your employees in order to fulfil your obligations under the relevant employment contract, modern award or enterprise bargaining agreement, talk to someone who knows the answer! Contact the workplace relations team at Nevett Ford for all your employment law questions on (03) 9614 7111.

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Not only the hair was short but the pay was too

A chain of Melbourne based hairdressing salons has been obliged to enter into an enforceable undertaking with the Fair Work Ombudsman to avoid prosecution after the agency uncovered widespread underpayment of employees.

In mid-2016 two former employees approached the FWO claiming that they had not been paid accrued annual leave on termination of employment.

One of the employees also alleged that penalty rates had not been paid for work on Sundays and public holidays.

The investigation the FWO conducted found that numerous employees had been underpaid a total of $88,000.00 over an eighteen month period.

The employer behind Best Cuts and Colours and What’s Up Hair agreed, as part of the enforceable undertaking, to write letters of apology to each of its underpaid employees and make a “contrition payment” to Monash Oakleigh Legal Service of $10,000.

Because the employer cooperated in the investigation the FWO thought that the best way of ensuring the underpaid employees received their correct pay was by having the employer enter the enforceable undertaking rather than prosecuting.

This case demonstrates the importance of employers knowing and complying with their obligations under a modern award.

If you are an employer who has had an inquiry from the FWO we have the lawyers who can advise you through the process.

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Unfair Dismissals and Penalties

The vast majority of applications for unfair dismissals are discontinued.

Generally, this means that employers and employees have reached agreement so that a formal decision or order of the Fair Work Commission is not required.

Where negotiation does not result in resolution, any order for reinstatement or the payment of compensation made by the Commission can have further consequences for an employer if it is not obeyed.

If you are an employer and ordered to pay $2,200 as compensation for a dismissal found to be unfair, you would be required to pay it even if you needed time to do so and even if you disagreed with the decision.

You would not put yourself in a position where the Fair Work Ombudsman successfully applied to the Federal Circuit Court for $47,000 worth of penalties because your failure to pay $2,200 was a breach of section 405 of the Fair Work Act 2009 (Cth).

This has happened and is a cautionary reminder to employers.

 

 

 

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Doctors Boss fined over $50,000 for threatening worker

The fact that an employer is a small business, that is having fewer than 15 employees, does not stop significant penalties being imposed upon it for proven breaches of the Fair Work Act.

Whatever size its business, an employer, must comply with the law.

This much is plain from the decision in FWO v Windaroo Medical Surgery Pty Ltd & Others (No 2) [2016] FCCA 2505.

In this case the Federal Circuit Court awarded penalties totalling $51,480 against the employer and two managers, who had been involved in breaches of the Act.

The employer threatened an employee doctor not to complain to the Fair Work Ombudsman about non-payment of his salary.

The doctor resigned and left Australia but the Fair Work Ombudsman took action not only to recover amounts owing to the doctor but also to ensure that employers understand that breaches of the Act have consequences.

The decision is a clear signal that employers and their managers, whatever their size, can expect stiff treatment for infringing a workers rights.

There are strong protections in the Fair Work Act to ensure that workers are not subjected to adverse action.  Employers should make sure they get legal advice from a workplace relations specialist before acting hastily. Equally workers who believe they have been treated unfairly should act quickly to protect their rights. Generally all rights to take action under the Act for unfair or unlawful dismissal must be done within 21 days of being sacked.

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Employer penalised for deducting monies from wages

Late last month, a Victorian cleaning business learned that deducting or withholding monies from employees is not permitted except in very specific circumstances.


Oz Staff Career Services Pty Ltd employed 102 casual cleaners pursuant to the Cleaning Services Award 2010. The employer deducted monies from its employees’ pay for meals without authorisation on three occasions over two months.


After conducting an audit of the business, the Fair Work Ombudsman took legal proceedings in the Federal Circuit Court against the company and its chief executive officer. It was found that the employer contravened the Fair Work Act 2009 (Cth).


Under the Act, employer deductions are prohibited, unless the employee has provided written consent.  The employee must expressly agree to reimburse the employer for any costs to be deducted from any final termination payment and must specify the amount of the deduction. This authorisation can be withdrawn in writing at any time.


A failure to comply with these requirements may breach your obligations as an employer under the Act, leaving you liable to civil penalties of up to $61,000 per breach.


If you believe you are entitled to recover monies from employees for overpayments or permitted deductions, contact the Workplace Relations team to Nevett Ford on (03) 9614 7111 to ensure that you comply with your requirements as an employer and avoid the risk of litigation and penalties.

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Workers are Employees not Contractors

Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd and others [2015] HCA 45 demonstrates that on arrangement where an enterprise engaged the services of cleaners through a labour hire company and represented to the cleaners that they were contractors not employees, is contrary to section 357 of the Fair Work Act 2009 as sham contracting.

Previously, sham contracting was thought to apply only to misrepresentations the employer made to the worker and not to extend to misrepresentations by a third party, which uses the workers’ services, to the workers status as employee.

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Workplace issues and the 7-Eleven scandal

In light of the recent 7-Eleven scandal surrounding the exploitation and underpayment of its workers, the Chairman and Chief Executive Office of 7-Eleven have announced their resignations.

The lesson to be learned by all employers, regardless of the size, scope or structure of their business, is that there are significant financial and non-financial consequences for employers who breach their obligations to employees.

Regardless of their visa or residency status, employees in Australia are entitled to basic rights, such as payment of minimum wages. The minimum wage and working conditions for an employee will depend on their age, position, experience and the area of work in which they practice.

The minimum wage for employees can be found in an applicable modern award, enterprise bargaining agreement or employment contract.

An investigation into the 651 separate 7-Eleven franchises across Australia has found that franchisees were paying their workers, many of whom were on temporary working visas, half the minimum wage.

When an employer breaches their obligations under the relevant instrument, be it an award, agreement or employment contract, its past and present employees have several avenues available to them in order to recover lost wages, including;

• Lodging a dispute application to the Fair Work Commission;
• Filing a Workplace Dispute application with the Fair Work Ombudsman; and
• Taking legal action in either a State or Federal court with jurisdiction.

Such processes are often highly stressful, lengthy and expensive for employers to defend and employers risk significant penalties for breaching their obligations.

It is not only international workers that are vulnerable to exploitation, with the Fair Work Ombudsman receiving almost 600,000 enquiries per year, more than 150,000 of which are complaints regarding underpayments.

If you have received a complaint from an employee in relation to an underpayment, act quickly and repay any monies owed before the matter is escalated to the next level.

Nevett Ford lawyers are specialised in all areas of workplace relations and can advise you on your obligations in relation to payment of entitlements, as well as defending any underpayment complaints and actions.

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Is it just me…or am I being bullied in the workplace?

Is someone at work making you feel harassed, humiliated or intimidated? You might not be able to explain the experience, but you may be the victim of workplace bullying.

It is often difficult to determine when it began, and it can be even more difficult to explain exactly how it happens, but workplace bullying has a real impact on its victims.   

Victims of workplace bullying are often uncomfortable reporting such behavior because they feel they can’t explain the nature of their complaint properly or lack the requisite proof.

Victims are also unwilling to make a complaint for fear of the ramifications, whether this involves being labeled a whistleblower or losing their job.

If you are a national systems employee, you have a legal right to make a workplace bullying complaint – so make it!

If you are being bullied in the workplace and would like to know your rights in relation to protecting yourself from bullying behavior, call Nevett Ford Melbourne lawyers for an initial consultation on (03) 9614 7111.

If you are an employer you need to have appropriate systems and policies in place to prevent bullying. SafeWork Australia and the Fair Work Ombudsman offer guidelines on how to prevent and respond workplace bullying.

Nevett Ford Melbourne lawyers acts for both employees and employers and can see matters from both points of view.

Stand up for your rights and speak out against workplace bullying.

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FAIR WORK COMMISSION’S EOFY CHANGES

Employers and employees – take note of the changes to the Fair Work Commission’s application fees, high income threshold and compensation awards that came into effect on 1 July 2014:

Fair Work Commission application fee

The Commission’s application fee to file an unfair dismissal application, general protections application and anti-bullying application has increased to $67.20 (see regulation 3.02 of the Fair Work Regulations 2009).

There has been no change to the time limit on making applications involving a dismissal, which is 21 days from the dismissal taking effect. 

High income threshold

To bring an unfair dismissal claim, employees must have been employed for over 6 months (or 12 for those employed by Small Business Employers) and either earn under the high income threshold, or have their employment covered by a Modern Award or an Enterprise Agreement (see section 382 of the Fair Work Act 2009). 

The high income threshold is now $133,000 (see regulation 2.13 of the Fair Work Regulations 2009).

The high income threshold includes wages, salary sacrifice amounts and non-monetary benefits.  

It does not include reimbursements, employer superannuation contributions, or payments that cannot be calculated in advance, for example bonuses that are reliant on an employee’s performance.

Compensation limits

For unfair dismissal applications relating to dismissals occurring on or after 1 July 2014, the Commission can award an employee a maximum of 26 weeks pay for compensation for their lost earnings.  This amount cannot exceed $66,500, which is half of the high income threshold (see section 392 of the Fair Work Act).

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Stress, shock and miscalculation all insufficient grounds for extension of time at the Fair Work Commission

The Full Bench of the Fair Work Commission has upheld a decision by Commissioner Gregory preventing an employee with a general protections claim against his former employer from filing his application one day late.

Section 366 of the Fair Work Act requires an employee to file a general protections application at the Commission within 21 days after the dismissal took effect.  This also applies to applications for unfair dismissal remedy (see section 394).

The term “dismissal taking effect” can be difficult to interpret and calculate from - especially when employers provide a notice period, or payments in lieu. 

The Act allows the Commission to grant a dismissed employee an extension of time to file an application if satisfied that “exceptional circumstances” exist, taking account of:
-   the reason for the delay,
-   when the employee first became aware of the dismissal,
-   if the dismissal was disputed,
-   any prejudice to the employer caused by the delay,
-   the merits of the application; and
-   fairness between the employee and others in their situation
   (see sections 366(2) and 394(3)).

Exceptional circumstances are explained as circumstances that are “out of the ordinary course, or unusual, or special, or uncommon.” (Nulty v Blue Star Group Pty Ltd (2011) 203 IR 1)

In Hart [2014] FWCFB 3270, Mr Hart was dismissed from his employment as a Sales Manager on 16 January 2014.  He filed a general protections application on 7 February 2014, one day after the expiration of the 21 day period.

In the extension of time application before Commissioner Gregory, Mr Hart gave evidence that he was on annual leave at the time of the dismissal, was in a state of shock and extreme stress and had miscalculated the 21 day period.

However, Mr Hart also admitted that shortly after the dismissal he had made enquiries with the Commission regarding avenues of redress, had been “considering his options” and that in fact “nothing” had prevented him from filing his application.

Commissioner Gregory expressed sympathy for Mr Hart but dismissed his application for an extension of time, ultimately because a stressed employee considering his options and miscalculating the time period was not exceptional, but “circumstances routinely encountered by the Commission” at [16].

Mr Hart appealed to the Full Bench of the Commission, which upheld Commissioner Gregory’s decision.

This is another example of the Commission strictly enforcing the time limits prescribed by the Act. 

Lessons to be learnt:

-  calculate the time period including the day of the dismissal;
-  filing a simple application is better than missing the deadline - you can always seek leave to     amend later;
- applications for extension of time require exceptional circumstances; and
-  circumstances that are stressful and unhappy for a dismissed employee are not necessarily exceptional.


Emma Pollett-Sutton
Lawyer

Anyone seeking advice about workplace laws should contact Nevett Ford Melbourne Lawyers on 03 9614 7111.

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