Former cafe manager fined $27,000 for underpayments after court finds he was seeing what he could “get away” with

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The former manager of an Oliver Brown chocolate outlet at Surfers Paradise has been penalised more than $27,000 after employees were underpaid more than $20,000.

The manager admitted in the Federal Circuit Court to being involved in the underpayment of 12 employees — seven of them overseas workers, according to a statement from the Fair Work Ombudsman this week.

The court found that between January and September 2015, employees were underpaid a total of $24,575, and the manager was involved from July 11 onward when he commenced in his role. 

The manager was responsible for hiring staff and setting wages rates. He was found to be liable for involvement in the underpayment of 12 staff, who were paid flat rates as low as $10 and did not receive weekend loadings. 

It was found that staff were paid low flat rates that undercut the minimum rates for ordinary hours, casual loadings and penalty rates under the Restaurant Industry Award 2010. 

The largest underpayment was of one Korean national, who was found to be owed $9,188 in back-pay.

Judge Salvator Vasta said different workers in this case had been given different pay rates, suggesting the manager had “quite deliberately calculated to see what it was that he could ‘get away with.'”

Seven of the workers were from overseas, five being Korean nationals. Four were on 417 working holiday visas, with the others on a 457 skilled work visa, 444 special category visa and a partner visa. There were also four juniors among the 12 underpaid.

“There doesn’t appear to be any other explanation as to why there were some rates given to some people and other rates to others, except when one looks at the personal and cultural background of the workers,” Judge Vasta said.

The underpayments were rectified in full late last year. The former manager was fined $27,200.

Managing director at Workplace Law Athena Koelmeyer says the case should serve as a warning that liability in such cases can extend beyond a company’s owner, given the manager in this case was found liable for his involvement.

“If you are a manager or another person responsible for wage setting, then under Section 550 of the Fair Work Act the Ombudsman is committed to not only penalising businesses but also the individuals responsible for dong the wrong thing with wages and conditions,” she says.

“The message is that if you are an owner and you rely on a manager to run the day to day affairs of the business, then it’s incumbent on you that your managers comply with employment law and know what they’re doing.”

Fair Work Ombudsman inspectors raised concerns about the underpayments as part of an audit launched in response to underpayment allegations.

Koelmeyer says the case forms part of a much wider crackdown by the Ombudsman’s office on the issue of overseas worker exploitation, many of whom might not be aware of their legal entitlements.

“It has been a pattern. The Ombudsman has made a concerted effort to engage with non-English speaking communities, communicating in languages other than English in newspapers and other forms of media that support non-English speaking communities in Australia,” she says.

“And what they discovered is that in many cases coming forward, it’s almost as if the legal system and employment structures in place in Australia was completely ignored.”

SmartCompany has contacted Oliver Brown for comment.

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ashley boland
ashley boland
4 years ago

In one respect this is not a shock. Under a free market liberal backed market regime, there should in no way be law only free-market mechanisms to determine pricing and policy. Also if managers are increasingly coming from developing nations, such as India and China one only has to take a holiday there to see the normalcy of extreme poverty and the feudal work arrangements that these countries practice. If you have grown up with this and suddey find yourself in the west where cost minimisation and maximum efficiency are exhonherated but the rule of law is not, then it is no wonder that new migrant managers such as these see opportunity and take a willingness to please when confronted with the Australian Labour market [opportunity]