$100,000 Message to underpaying employers

August 13, 2018

Currently, the most nominated industry for 457 (Temporary work (Skilled)) visa-holders is cafes and restaurants. It is unsurprising that underpaying allegations have surfaced all over recently, putting restaurant owners engaging in this practice on notice. From July 2015 to June 2016, the hospitality industry accounted for 11% of all disputes lodged with the Fair Work Ombudsman (FWO). Of the 1,066 compliance activities FWO conducted, 615 businesses or 58% of the sample were found to be in contravention of the Fair Work Act 2009 (Cth) (the Act).

In Fair Work Ombudsman v Robit Nominees Pty Ltd & Anor (2018), the court held pay slips should no longer be an optional feature of employment. Specifically, employers must pay correct entitlements and maintain and provide accurate employment records. The FWO took on a licensed cafe which required a cook on 457 visa to repay nearly $14,000 in cash payments to her employer. In this case, the employer sponsored the employee’s 457 visa after her working holiday visa expired. Over the course of her employment, the employer told her it could not afford to pay her entire salary, and that she would need to make weekly cash-back payments of $218 from her salary to fund her tax and superannuation contributions. The employee paid nearly $14,000 out of her salary over 15 months.

The Act provides that an employer must not directly or indirectly require an employee to spend any part of an amount payable to the employee in relation to the performance of work if the requirement is unreasonable in the circumstances. The employee was also being underpaid award entitlements and was not being issued with payslips.

In assessing the appropriate penalty to be issued against the employer and its director, the Court observed that the repayment scheme was established in relation to a vulnerable employee to create the false impression that the employee was being paid her lawful entitlements. The Court penalised Robit Nominees $87,345 and its director $9,720.

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