An Adelaide car windscreen business and its director have been fined close to $85,000 for the underpayment of employees after a federal court Justice ruled some of the company’s conduct involved “an element of exploitation”.
The Federal Court handed down penalties of $73,425 to Complete Windscreens and $11,220 to the company’s sole director and part-owner Lindsay Dean after the company was found to have underpaid seven employees over four years, from 2007 to 2011.
Fair Work inspectors found one of the company’s employees had been paid a flat rate of $12.50 an hour over a period of 10 years.
Three other workers aged between 18 and 20 were found to have been paid flat rates of between $12.00 and $21.62 an hour.
Justice Anthony Besanko said in his decision on penalties that the company must have known some employees were being underpaid, and that some elements of the payments were “deliberate, or at the very least reckless”.
As well as the fines, the company was also ordered to backpay staff entitlements, including superannuation.
Acting Fair Work Ombudsman Michael Campbell said the scale of the underpayments were a contributing factor in the decision to take the case to the courts.
“The size and blatant nature of the underpayments and the involvement of young workers were important factors in our decision to pursue this matter in Court,” he said in a statement.
In 2013 the Fair Work Ombudsman launched action against Complete Windscreens for an alleged underpayments totalling $100,000, however, a spokesperson for the Ombudsman told SmartCompany this morning “the quantum of underpayment alleged by the Fair Work Ombudsman was revised after the matter was first filed in court”.
In 2013, Complete Windscreens director Lindsay Dean told SmartCompany he planned to fight allegations of underpayment in court, calling the accusations “rubbish”.
This morning Dean said in a statement to SmartCompany that the business believed it had been paying workers correctly.
“As a family-owned business in South Australia of more than 40 years, we insist on ethical and honest relationships with our employees,” Dean says.
“Our breaches of employment legislation were inadvertent, never wilful and largely arose from us not carefully monitoring an external payroll provider arrangement. The listed underpayments of award entitlements primarily stem from an inadvertent pay rate error.”
The business told SmartCompany it now uses a new payroll provider, and it accepts the fines as decided by the Federal Court.
Holding Redlich partner Rachel Drew told SmartCompany these kind of penalties are usually reserved for businesses found to be intentionally avoiding their obligations for minimum wages.
Drew says small businesses need to remember that minimum entitlements cannot be traded off for other perks at work.
“There is rarely any way to substitute the minimum,” Drew says.
Given the ability of employees to raise issues of underpayment directly with the Ombudsman, Drew says it is likely cases of underpayment will eventually come to light.
“It is very easy for an employee to get free assistance to rectify underpayment,” Drew says.