In a recent judgment handed down by the Federal Court (Fair Work Ombudsman v Complete Windscreens (SA) Pty Ltd (No 2)  FCA 1563), an Adelaide car windscreen business and its director have been fined nearly $85,000 for the underpayment of employees after a Federal Court decision ruled some of the company’s conduct involved “an element of exploitation”.
The Federal Court handed down penalties of $73,425 to Complete Windscreens and $11,220 to the company’s sole director and part-owner Lindsay Dean (Dean) after the company was found to have underpaid seven employees over a four year period from 2007 to 2011.
Fair Work inspectors found one of the company’s employees had been paid a flat rate of $12.50 an hour over a period of 10 years. Three other workers aged between 18 and 20 were found to have been paid flat rates of between $12.00 and $21.62 an hour.
This resulted in various employees being underpaid their minimum hourly rates, casual loadings or penalty rates for weekend and overtime work. Meal allowances and leave entitlements were also underpaid and record-keeping and pay slip laws were contravened. The underpayments of the seven employees ranged from $1,308 to $17,990.
In handing down his findings, Justice Besanko found that Complete Windscreens and Dean must have known that the employee paid the lowest flat rate, was being underpaid. His Honour said at [para 40]:
“His hourly rate was considerably lower than other employees who were both younger and less experienced. (He) was paid $12.50 per hour over 10 years and nearly every other employee was earning more than him, including the trainees with no experience.”
Besanko J. rejected the company’s argument that, as a family business, it was not as culpable as a large organisation with dedicated human resources and accounting advisers, he found Complete Windscreens made [at para 28]“… no or no adequate enquiries about the pay and conditions of the employees…”despite being a member of the Motor Traders Association of South Australia and having access to industrial advice.
Acting Fair Work Ombudsman Michael Campbell said the scale of the underpayments were a contributing factor in the decision to take the case to the courts.
In 2013, the Fair Work Ombudsman launched action against Complete Windscreens for allegedly underpaying seven employees more than $100,000 over a period of four years, however, a spokesperson for the Fair Work Ombudsman said “the quantum of underpayment alleged by the Fair Work Ombudsman was revised after the matter was first filed in court”.
Complete Windscreens director Lindsay Dean said he planned to fight allegations of underpayment in court, calling the accusations “rubbish”. Regarding the current penalty, Dean said in a statement that the business believed it had been paying workers correctly:
“As a family-owned business in South Australia of more than 40 years, we insist on ethical and honest relationships with our employees. Our breaches of employment legislation were inadvertent, never wilful and largely arose from us not carefully monitoring an external payroll provider arrangement. The listed underpayments of award entitlements primarily stem from an inadvertent pay rate error.”
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.
Adelaide business cops $85,000 in fines for underpaying workers after three-year Fair Work case - smartcompany.com.au
Dark day for windscreens company penalised almost $85,000 for exploiting employees - FWO Media Release
Fair Work Ombudsman v Complete Windscreens (SA) Pty Ltd (No 2)  FCA 1563 (22 December 2016)
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