A Sydney-based linen and homewares retailer that was previously put on notice by the Fair Work Ombudsman will face court after it allegedly underpaid a foreign worker more than $60,000.
JPA Manchester Pty Ltd, which trades as Benson Australia, operates six stores across New South Wales and also has an online store. The Ombudsman alleges the retailer underpaid a Chinese shop assistant who had worked at two of its stores a total of $60,904 over nearly four years between 2012 to 2015.
The worker was allegedly paid rates between $9 and $19.05 per hour, where award rates at the time entitled her to up to $18.99 per hour for standard work, $23.74 on Saturdays, and $37.98 for overtime.
The Ombudsman also alleges the company and its director contravened pay slip and record-keeping laws.
The alleged underpayment comes after the company signed an enforceable undertaking in 2014, when the Ombudsman found it to have underpaid another employee over $27,000 between 2010 and 2014.
The enforceable undertaking outlined the business must conduct self-audits and regular reporting to the Ombudsman about its compliance to workplace laws, as well as providing a detailed plan on how the business would ensure compliance moving forward from the underpayments.
Despite these assurances, the Fair Work Ombudsman claims the business has continued to flout the Fair Work Act, a course of action employment law partner with Patron Legal, Shane Wescott, believes would be “unusual”.
“In my experience undertakings are usually complied with, and it’s unusual to see subsequent breaches,” Wescott told SmartCompany.
“Enforceable undertakings are designed for businesses to avoid a prosecution process from the FWO against the employer, almost like a halfway house.”
“It certainly gives the employer quite a good warning about whatever failings they’ve potentially had in relation to their obligations to employees.”
Ombudsman Natalie James said in a statement the alleged contravention of the previous enforceable undertaking was a “key factor” in deciding to commence legal action in the Federal Circuit Court.
“It is completely unacceptable to continue to allegedly blatantly underpay an employee after being put on notice to comply,” James said.
As the Ombudsman seeks to take legal action against the business, Wescott believes any penalties that could be potentially decided in this case could “take into account an undertaking was entered and allegedly breached”.
“The FWO will prosecute and not settle the matter as it has an obligation that relates to Australian workplaces more broadly, they need to set standards,” Wescott says.
With the previous undertaking including self-audits and reporting to the Fair Work Ombudsman, it is unclear why these audits didn’t pick up on the alleged underpayment, Westcott believes.
“The fact we are in a situation where the business is being prosecuted against suggests there may have been a failing in that audit process,” Wescott says.
Wescott notes recent FWO cases show that accountants can be held liable for underpayment by their clients, with a case earlier this year finding accounting business Ezy Accounting 123 had “deliberately shut its eyes” to underpayment occurring when it provided accounting services to a client.
JPA Manchester Pty Ltd could face penalties of up to $54,000 per contravention of workplace law, while its the director could face penalties of up to $10,800 per contravention. The Fair Work Ombudsman is seeking orders for the business to pay back the employee, along with an audit of its compliance and further staff training.
The Ombudsman is also seeking an injunction against the business to prevent it from underpaying employees again, lest it face contempt of court proceedings.
SmartCompany contacted JPA Manchester but did not receive a response prior to publication.