Two New South Wales small businesses have learnt the lesson of not co-operating with the Fair Work Ombudsman the hard way.
The former operator of the Lattouf Hair and Day Spa in Castle Hill has been fined a total of $24,480 for underpaying a teenage apprentice hairdresser and failing to comply with notices from the ombudsman, while Stepping Stones Child Care Centre at Oak Flats has been hit with $15,000 in penalties after failing to co-operate with an underpayment investigation by the ombudsman.
Both fines were handed down by the Federal Circuit Court in Sydney.
At Lattouf Hair and Day Spa, former owner-operator Jack Younes was found to have underpaid an apprentice a total of $6471, including minimum wages, penalty rates and leave entitlements, between July 2012 and October 2013.
The ombudsman issued Younes and his company, Viper Industries, with a compliance notice in April 2014, requiring the underpayment to be rectified within 21 days.
However, the business failed to respond to the April notice and a follow-up notice in June. The ombudsman had previously received complaints from other young workers employed by Younes and had attempted to contact him on at least 35 occasions.
The lack of co-operation led to the ombudsman launching legal action against Younes, who has been fined $4080, and Viper Industries, which has been fined $20,400.
Judge Sylvia Emmett, who said the company had “a reckless disregard” for its workplace obligations to its staff, also ordered the apprentice be back-paid in full.
But it is unclear if Viper Industries is still operating. According to the Australian Securities and Investments Commission, the company was the subject of a notice of proposed deregistration in July 2014. SmartCompany was unable to contact the company or Younes.
The salon is now owned by a company called Evolve and an Evolve spokesperson confirmed to SmartCompany this morning Younes has not been involved with the business since Evolve purchased the franchise in July 2014.
At Stepping Stones Child Care Centre, Fair Work investigators found two employees were underpaid $2552 and $790 respectively for short periods of employment in 2013.
The ombudsman said in a statement today it tried to engage with the centre and owner-operator Ailsa Tavendale “to resolve the matter co-operatively” but its efforts were “rebuffed”.
A compliance notice was issued in January 2014 for the amounts to be back-paid within 21 days but Tavendale and the company failed to respond, prompting the ombudsman to commence legal proceedings.
Tavendale has been fined $3000 and Stepping Stones Child Care Centre has been fined $12,000. Tavendale was also ordered to undertake training on employer obligations under the Fair Work Act, while Stepping Stones will be required to commission an external audit of its pay practices and provide the results to the ombudsman.
SmartCompany contacted Stepping Stones but Tavendale was unavailable for comment.
Lily Fordyce, employment, industrial relations and workplace safety solicitor at TressCox, told SmartCompany when faced with an investigation or compliance notice from the Fair Work Ombudsman, “employers need to get on the front foot by seeking advice and responding within the ombudsman’s timeframes”.
If they have to do so, employers “risk hefty fines”, Fordyce says.
“While a compliance notice itself is non-punitive, ignoring it can lead to proceedings being initiated against the employer by the Fair Work Ombudsman,” says Fordyce.
“Courts have sent a strong message in support of ‘general deterrence’ in recent underpayment cases, with large penalties being issued against small businesses in certain industries.”