FWO v Her Fashion Box Pty Ltd [2019] FCCA 425: Court Imposes Penalties for Staff Underpayment

Thursday 7 March 2019 @ 2.56 p.m. | Industrial Law | Legal Research

The Fair Work Ombudsman has announced in a Media Release that a fashion start up has received a number of penalties for underpaying three workers, in the recent case of Fair Work Ombudsman v Her Fashion Box Pty Ltd & Anor [2019] FCCA 425 (28 February 2019) in the Federal Circuit Court ("the Court").  The company, Her Fashion Box Pty Ltd (the “Company”) and the sole director, Kathleen Purkis , have received a combined total of $329,133 in penalties.


The Media Release reports that the business sold on-line subscribers boxes containing fashion accessories and beauty products. The Company was founded in 2013 and has since shut down.

The Court found three employees were underpaid a total of $40,543 for their entitlements including minimum hourly rates, overtime, public holiday pay and annual leave between 2013 and 2015.

One of the employees, who was a graphic designer, worked two days per week for almost six months under a purported “unpaid internship”, before receiving a one-off payment of just $1,000.  She was underpaid a total of $6,913.

In addition to that employee, the company also underpaid another graphic designer a total of $15,511 over a period of two years of full-time work as a result of underpayment of the minimum award entitlements.

A third employee, engaged on a full-time basis as a brand partnerships manager, was underpaid a total of $18,119 over a 12-month period. The three workers have now received their back pay in full.

The Judgment

In handing down his judgment, Judge Manousaridis noted at [para 87]:

“The penalty should be set at a level that, having regard to the other circumstances of the case, should signal to employers who might be tempted not to inquire into their legal obligations as employers or not to comply with their legal obligations, particularly in relation to inexperienced workers, that there is a significant risk of being exposed to the imposition of a pecuniary penalty if they are to succumb to such temptation.”

He also described the contraventions of the relevant legislation at [para 132] as:

 “… serious and sustained contraventions of important provisions of the FW Act. In my opinion, substantial as the penalties I have assessed are, I am satisfied they are appropriate and proportionate to the contravening conduct.”

Comment from the Ombudsman

Fair Work Ombudsman Sandra Parker said in a Media Release that inspectors investigated the company after receiving complaints of underpayments from the workers:

“… Business operators cannot avoid paying lawful entitlements to their employees simply by labelling them as interns. Australia’s workplace laws are clear - if people are performing productive work for a company, they are legally entitled to be paid minimum award rates. Unpaid placements are lawful where they are part of a vocational placement related to a course of study … ”

Previous Complaints against the Company

In 2016, NSW Fair Trading received several complaints about the online fashion store concerning the non-supply of goods and of the difficulty in making contact with the owner. At the time, NSW Fair Trading Commissioner, Rod Stowe commented:

“The complaints received mostly relate to accepting payment without supplying goods, not responding to requests to cancel subscriptions and not responding to contact from consumers about missing goods. In some cases, two monthly subscription payments were collected before any goods were delivered.”

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