The assets of a Sydney-based facility management company have been frozen by the Federal Court, after the Fair Work Ombudsman alleged the business had underpaid workers more than $300,000.
The Fair Work Ombudsman has recently taken action against a string of underpayment cases in the cleaning industry, but the move to freeze company assets is a rare strike for the watchdog.
The ombudsman sought the court order to freeze the assets of facility management company Grouped Property Services, following legal proceedings against the company which commenced in July.
The freezing orders were consented to by the company.
Fair Work Ombudsman Natalie James said in statement the order would prevent Grouped Property Services from being stripped of assets or placed into liquidation, which would have frustrated any back-payment orders against the company.
“We have received more than 200 complaints against Grouped Property Services and associated companies over a number of years and we are concerned that the company’s alleged business practices have led to employees being denied their lawful minimum entitlements,” James said.
The ombudsman alleges Grouped Property Services underpaid 51 workers, most of who were engaged as cleaners, $308,000.
However, SmartCompany understands Grouped Property Services does not directly employ people and the amount of the alleged underpayments is disputed.
A judgment is yet to be made in relation to this matter.
The ombudsman also alleges the company breached adverse action and sham contracting laws, when it claimed to have outsourced the employment of the workers to a labour hire company that was controlled by Grouped Property Services.
The company faces maximum penalties of up to $51,000 per breach, while the company’s former owner and sole director, Rosario Pucci, and his brother Enrico Pucci, the company’s current owner and sole director, each face $10,200 per breach.
The watchdog is seeking all underpayments to be rectified in full.
The Fair Work Ombudsman has also alleged Grouped Property Services had previously registered three other labour hire companies at its address, which had previously gone into liquidation, leaving no assets to pay employees.
Rosario Pucci had previously received $4400 in penalties for underpaying employees from one of those companies, Wash and Go, which was placed into liquidation preventing the ombudsman from securing that penalty.
TressCox partner Rachel Drew told SmartCompany it is extremely difficult to obtain courts orders to freeze or control assets, and this case must have presented serious concerns about the company’s ability to repay its underpayments.
“It is extremely rare in general law, and it’s even rarer in industrial matters,” says Drew.
“The Fair Work Ombudsman must have presented the Federal Court with very good evidence.”
Drew says the ombudsman has placed a focus on non-genuine labour hire arrangements, which are used by employers to avoid employment obligations.
“It very easy to get it wrong, especially with these sorts of parallel companies, employers need to be very careful to know what their obligations are.”
She says labour hire companies can breach sham contracting laws by attempting to treat a worker as though they are an independent contractor to avoid employment obligations, when in fact the nature of the legal relationship is that of an employee.
SmartCompany contacted Grouped Property Services, but did not receive a response prior to publication.
*This article was updated on March 2, 2016 to clarify the nature of the company’s work and to add additional information about the allegations made by the Fair Work Ombudsman.