FWO v IE Enterprises Pty Ltd  FCA 60: Penalties for Deliberately Underpaying Employees
In Fair Work Ombudsman v IE Enterprises Pty Ltd  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")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”.
In handing down his judgment, Anderson J said at [para 57]:
At [para 76] his Honour commented:
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:
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:
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 ain 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.
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. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.
Fair Work Ombudsman v IE Enterprises Pty Ltd  FCA 60 (11 February 2021)