New car, zero interest (in employee’s wages): Labour-hire operator gets referral to public prosecutor for non-payment of wages

The power of the courts to make orders in response to a contravention of a provision of the Fair Work Act 2009 (Cth) (FW Act) is a broad one. It is derived from section 545(1) of the FW Act, which states:

“The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.”  [emphasis added]

In most cases, a finding of deliberate non-compliance by a business will result in the imposition of a hefty fine by a court (a pecuniary penalty order). It is also not uncommon to see courts issue other orders such as requiring non-compliant businesses to undergo external audits or requiring managers to undergo specific training.

The Federal Circuit Court of Australia has recently utilised the wide scope of this power in Fair Work Ombudsman v Greenan (No. 2) [2017] FCCA 2059. In this case, Justice Wilson issued orders that not only imposed upon an individual the maximum penalty for contravention of a provision of the FW Act but also referred the individual’s conduct to the Commonwealth Director of Public Prosecutions for investigation.

Mr Greenan (the Employer), the owner and person responsible for labour-hire company United Consulting, became the subject of an investigation by the Fair Work Ombudsman (FWO) when one of his employees requested the FWO’s assistance following non-payment of wages.  

The FWO found that the Employer had agreed to sponsor Mr Aldi’s (the Employee’s) bridging visa. He then supplied the Employee to Melbourne City Renault (MCR) as a mechanic from January 2016 to March 2016.

In a separate but not un-related agreement, the Employer purchased a car from MCR on a payment plan. MCR had agreed to credit the payment plan with an amount equivalent to the Employee’s wages, with the intention that the Employer would then be able to pay the Employee directly. 

However, the money never reached the Employee and the Employer failed to lodge the sponsorship application.

Following a request for information from the FWO, the Employer sent them a document in which he admitted that he had only paid the Employee in cash and apologised for breaching the FW Act. He noted that he was aware of the Employee’s financial difficulties and that he had offered to put him up in a house, free of charge.

When the FWO discovered that the Employee had been underpaid, it issued a compliance notice to the Employer. After requesting and obtaining an extension for compliance of two weeks, the Employer stopped corresponding with the FWO and did not comply.  

When the FWO later commenced court proceedings against the Employer personally, he refused to participate.

In the absence of any evidence to satisfactorily explain the Employer’s actions, Justice Wilson found that they “smacked of serious nefarious conduct”, warranting an order that the matter be referred to the Commonwealth Director of Public Prosecutions for investigation.

His Honour also noted that “all employers, irrespective of their size and financial position, are bound by the same workplace laws” and ordered that the Employer pay $10,800 (the maximum penalty for an individual in contravention of the FW Act) for:

  1. Failing to comply with his record-keeping obligations under the FW Act; and
  2. Failing to comply with a compliance notice.

This case highlights the broad discretion a court has in issuing orders once it is satisfied that there has been a contravention of the FW Act. The FWO had submitted in the proceedings that penalties in the range of 50%-60% of the maximum were appropriate. Evidently, the Federal Circuit Court considered the contraventions were far more serious and warranted the maximum penalty plus referral to the criminal jurisdiction. 

Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

02 9256 7500 | sydney@workplacelaw.com.au

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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