Pay Now, or Pay (Bigtime) Later

Recent penalties handed down by the courts as a result of underpayment investigations by the Workplace Ombudsman should serve as serious warnings to employers to comply with employee Awards. A Sydney meat market was recently fined $93,600 by the Federal Magistrates Court for underpaying one of its employees approximately $9,400 and breaching multiple terms of the Award that governed the employee's contract.

The employee, a 21-year-old apprentice butcher, was not paid the correct wages, overtime, weekend and public holiday allowances, pay in lieu of notice, annual leave, sick leave, meal allowances and superannuation.

The severity of the penalty handed down was exacerbated by the failure of the employer to act promptly to remedy the breaches of the award. The initial investigation began in March 2006 following a complaint made by the employee, but the underpayments were not rectified until January 2008. The substantial penalty therefore pointed to the "significant and ongoing failure" by the responsible managers "to be properly informed as to the effect of the Award". The breaches were considered "serious and inexcusable" by the Court because of the large size of the company (it employs approximately 9,000 employees across various retail butcher stores, abattoirs and smallgoods outlets) and its associated business structure in the industry.

In other recent cases, a Hobart hair and beauty business was fined $28,000 for underpaying one of its employees approximately $9,000. Another company was fined $66,000 for underpaying its employees' approximately $14,000. Company directors have also been found liable and ordered to pay $40,000 relating to breaches of the Workplace Relations Act. It is imperative therefore, that employers are aware of their obligations at law and abide by the terms and conditions set out in applicable awards or instruments that apply to their employees.