A former petrol station operator has been handed a $123,000 fine by the Federal Court for underpaying two employees almost $50,000 and ignoring attempts by the employment watchdog to settle the matter out of court.
The Fair Work Ombudsman initiated legal action in February against Wedderburn Petroleum, the former operator of a Caltex petrol station at Wedderburn in regional Victoria.
The ombudsman alleged Wedderburn Petroleum underpaid two employees, one aged in her late 20s and another aged in her 50s, amounts of $21,637 and $25,621 respectively between 2008 and 2013.
The employees were paid flat hourly rates ranging from $10 to $15.96 for all hours worked, meaning they were underpaid minimum hourly rates, casual loadings, annual leave entitlements and penalty rates for weekend, public holiday and overtime shifts.
Wedderburn Petroleum was also found to have contravened record-keeping and pay slip requirements.
The court heard the ombudsman first contacted Wedderburn Petroleum about the need to pay employees correct minimum rates in 2010 but the company chose to “deliberately” underpay the two workers and failed to co-operate with orders from the ombudsman to back-pay the workers.
“The breaches were extensive and resulted in proportionately significant underpayments to each employee,” Judge Frank Turner found.
“The failure to provide pay slips affected the employees’ ability to obtain finance. The employees were on low income and needed to seek additional income to enable them to meet their living expenses.”
Turner said the size of the fine handed to Wedderburn Petroleum reflects a number of factors, including that the business had made “no effort to co-operate with the Fair Work Ombudsman”, had “shown no contrition” and had shown “flagrant disregard” for court orders to back-pay the workers earlier this year.
Fair Work Ombudsman Natalie James said in a statement deliberately underpaying workers and then refusing to rectify the underpayments will not be tolerated by her office.
“We will not hesitate to take action to ensure employees receive their basic minimum entitlements,” said James.
“Successful litigations such as this also benefit employers who are complying with workplace laws, because it helps them to compete on a level playing field.”
TressCox partner Rachel Drew told SmartCompany the case “really does highlight that the level of cooperation [with the ombudsman] from an employer can result in a different penalty”.
“The conduct of an employer when responding to a Fair Work Ombudsman inquiry can have a significant impact on the outcome in court,” says Drew.
“For example, if it was a matter of the employer correcting the rates they were paying or rectifying underpayments, the Fair Work Ombudsman would probably make the decision not to proceed with court action if the employer agrees to co-operate.”
“But this employer seems to have taken a chance that the ombudsman wouldn’t commence proceedings and they will pay the price for that.”
Drew says if a business owner is contacted by the ombudsman, it is in its best interests to co-operate.
“They are entitled to defend themselves and provide a full explanation of how they run their business but they need to make sure they are being responsive to the investigation,” she says.
SmartCompany was unable to contact Wedderburn Petroleum as the company no longer operates the Caltex petrol station at Wedderburn.