Despite employers’ protests they don’t have enough time to understand all the various pay rates and awards, a Fair Work Ombudsman ruling has once again warned ignorance is no excuse.
The case involves a security company, Secom Australia, which has been fined $66,000 for underpaying 19 employees by $21,548 between February and June 2011.
Secom Australia was contacted by SmartCompany this morning, but declined to comment.
The employees worked in the Australian Capital Territory, while one worked at a Cooma, New South Wales location. The employees were underpaid for penalty rates on night work, weekends and public holidays.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
Judge Warwick Neville of the Federal Court found in his judgment that even though the company said it didn’t understand the relevant legislation, this is no excuse.
“There is no reason given why proper advice was not taken by the Respondent to ensure that there was compliance,” he found. “Put more bluntly: ignorance is no excuse.”
Rachel Drew, partner at TressCox Lawyers, told SmartCompany most employers attempt to find out how much they should be paying employees, even if they ultimately don’t come to a satisfying conclusion.
It is the effort that matters, Drew says, as the Fair Work Ombudsman will be more lenient on a company which has at least taken the effort.
This is a similar story among government organisations – the Australian Tax Office has a history of being more lenient on companies or individuals which have taken a genuine effort to figure out what they should be doing.
“If an employer can show they weren’t being deliberately ignorant of correct pay rates, that they have made some attempt towards finding out what the correct rates are… you might see that the types of penalties they receive are lower.”
In these types of underpayment cases, the missing amount must always be repaid, Drew says. But the penalties on top of that may be reduced depending on how much effort has gone into understanding correct pay rates.
“As businesses grow, they forget to prioritise human resources,” Drew says.
“You have to keep yourself up to date, and it really is the best responsibility of the business owner or directors to make sure the business is constantly checking whether they are compliant with correct pay rates.”
Judge Neville said Secom Australia was “an organisation of some means”, but found it had no system to ensure minimum entitlements.
“This was a very significant omission on the part of management,” he found.
The FWO is constantly looking for examples of underpayment – some of which can be worth tens of thousands of dollars.
Last month, the FWO launched legal action against the owners of a New South Wales transport company claiming three workers were underpaid a total of $250,000.