The Fair Work Ombudsman has launched proceedings in the Federal Circuit Court against the former owner of a Sydney childcare centre, who it says paid employees as little as $2.15 an hour.
The employment watchdog this week filed a statement of claim against Mark Edward Myles, the former owner and operator of Bollygum Childcare Centre in Western Sydney, claiming Myles was responsible for underpaying 16 childcare workers almost $362,000 over a five year period.
Seven of the former employees were aged under 21 at the time of the alleged underpayments and some were trainees.
The ombudsman said in a statement the underpayments appear to be primarily the result of the employees receiving flat hourly pay rates, which differed greatly between staff and did not cover entitlements such as minimum hourly rates, casual loadings, overtime rates, annual leave entitlements or a laundry allowance.
Fair Work alleges one Bollygum employee was paid just $2.15 an hour, while others received $3.31, $3.37 and $3.98 an hour.
However, the ombudsman said it acknowledges some of the centre’s employees were paid rates much higher than their minimum entitlements for some work.
The ombudsman also alleges Myles contravened the adverse action provision of the Fair Work Act when he allegedly reduced the rostered hours of an employee after she complained about her pay to the Fair Work Ombudsman.
Bollygum Childcare Centre collapsed into liquidation last year, preventing legal action against the company, but Myles faces maximum penalties of between $3300 and $10,200 per breach of the Fair Work Act.
The ombudsman will ask the court to order any penalty be paid to the employees to go towards rectifying the alleged underpayments.
Employment lawyer Peter Vitale told SmartCompany the rates of pay quoted by the ombudsman are “extraordinarily low”.
“But given the obvious disregard for the employer’s legal obligations, it does seem odd they differentiated so carefully between different employees,” says Vitale.
Vitale says, assuming the ombudman’s allegations in relation to the adverse action claim are proven in court, the case “is a pretty straight-out and serious breach of the general protection provisions of the Fair Work Act”.
“An employee who has complained to the ombudsman about their wages had their working hours reduced as a result,” he says.
“It’s about as straightforward breach as you will find.”
Vitale says the case highlights the dangers for employers who try to implement a single flat rate of pay to cover all employee entitlements.
“That’s not to say that sort of arrangement can’t work, but given the range of award entitlements and different methods of calculation, it is a difficult exercise to come up with a flat rate of pay, especially when employees are undertaking large amounts of overtime or weekend work,” says Vitale.
“For employers considering that approach, they must exercise extreme care.”
SmartCompany was unable to contact Myles.