FWO v IE Enterprises Pty Ltd [2021] FCA 60: Penalties for Deliberately Underpaying Employees

Thursday 18 February 2021 @ 2.12 p.m. | Industrial Law | Legal Research

In Fair Work Ombudsman v IE Enterprises Pty Ltd [2021] FCA 60 (11 February 2021) the Federal Court of Australia (“the Court”) has secured a total of $256,000 in penalties against a Melbourne toy retailer company and its director for deliberately underpaying migrant employees.

The Fair Work Ombudsman's ("FWO") Media Release reveals the affected employees were visa holders from countries including Malta, the Netherlands and the Republic of Korea, and most were aged in their 20s.


According to the media release, the employees were underpaid for between one and nine weeks of work performed between 23 October 2017 to 2 January 2018. They worked at various Uncle Toys pop-up stores in the Melbourne area.

The FWO has received requests for assistance from former employees of IE Enterprises dating back several years, and previously issued the company with a letter of caution, education materials and pay guides.

Eyal Israel (owner and manager of the company) paid eight casual workers low rates (from as little as $6.70 an hour), and did not pay some employees at all for some hours worked. Record-keeping and pay slip laws were also breached.


The Court imposed a $215,000 penalty against IE Enterprises and an additional $41,000 penalty against Mr Israel.

In addition to the penalties, the Court has ordered IE Enterprises to back-pay the employees a total of $21,748, with individual underpayments ranging from $395 to $5,041.

The Employee’s Evidence

According to the judgment, one worker gave evidence that she borrowed money from a friend in Korea to “afford basic living expenses”, while another gave evidence that she was “very worried” about how she would afford to pay for food and accommodation, while another employee said he was afraid that, if he resigned, he would not receive his previous week’s wages, and that he “felt exploited and helpless”.

The Judgment

In handing down his judgment, Anderson J said at [para 57]:

“The Respondents have shown no contrition, no cooperation and taken no corrective action …”

At [para 76] his Honour commented:

“I am satisfied on the evidence that the Respondents’ conduct was deliberate and systematic and had a significant impact on the relevant employees.”

His Honour said there was a strong need in this case to impose penalties which were high enough to deter other employers from similar conduct, particularly in the retail industry, which attracts young, often unskilled overseas workers, and at [para 77] he commented:

“Underpayment of employees and the exploitation of vulnerable employees undermines core principles of the Australian workplace relations system. Those core principles include an enforceable and fair safety net of employment terms and conditions. It is, in my view, fundamental to the effectiveness of workplace regulation in Australia that this safety net is extended to all employees, regardless of their youth or visa status.”

Comment and Reaction from the FWO

Acting Fair Work Ombudsman Jeremy O’Sullivan said in a media release that the judgment “highlighted the importance of the higher penalties which could be imposed for serious contraventions to deter employers from deliberately doing the wrong thing”.

Mr O’Sullivan said:

“We will continue to make full use of the Protecting Vulnerable Workers laws [Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth)] to ensure that any individuals or companies who commit serious contraventions are held to account and understand the consequences of their failures. Failing to correct underpayment issues after being put on notice is simply unacceptable …”

Previous Prosecutions by the FWO

According to the FWO, this is the second time the Fair Work Ombudsman has secured penalties in court under the “serious contraventions” provisions, introduced by the Protecting Vulnerable Workers laws, after obtaining penalties against a Perth café franchisee in 2020 for repeat offending of underpaying vulnerable workers despite having previously faced court for similar conduct.

Under the laws (which came into effect in September 2017) the maximum penalties for serious contraventions are $630,000 per breach for a company and $126,000 for an individual, 10 times the penalties which would ordinarily apply.

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