The case for staying on top of wages

A cafe has felt the Fair Work Ombudsman's wrath after being found to have attempted to ride "roughshod" over wage requirements. Restaurant and Catering Australia's workplace relations team looks at the case.

THE FAIR Work Ombudsman has recently commenced legal action in the Federal Court to wind up a Melbourne café business and is seeking orders from the Court to recover unpaid wages for former employees.

In earlier litigation in the Melbourne Magistrates Court, the Fair Work Ombudsman v Compumark Pty Ltd case found two casual kitchen hands were underpaid $7,061 and $1,575 in wages and superannuation over the course of their employment which spanned only four and five months for each employee. The magistrate deemed these breaches to be significant sums over a very short period of employment.

The employer had asserted that the employees were covered by Australian Workplace Agreements (AWAs) yet could not provide any evidence that the instruments were lodged - although was well aware of lodgement process as they had lodged appropriately in the past. The kitchen hands were underpaid their minimum hourly rates, overtime rates and weekend rates as a result of being paid flat hourly rates as low as $14.50. Magistrate Hawkins has instructed Compumark to back-pay the workers the money owed, plus interest.

However, the workers involved in the case of Compumark have still not been back-paid and as a result this year the Fair Work Ombudsman launched further legal action in the Federal Court.

Magistrate Hawkins said the underpayments were "deliberate" and "an attempt to ride roughshod over established legal entitlements".

It is necessary for any employer to do their due diligence when it comes to employing staff. When you do employ an employee at any level, at minimum, an employer needs to provide information on what award or industrial instrument, such as an enterprise agreement that covers the employee's role - and ensure the employee has access to the instrument. Also the nature of the employment relationship needs to be established. Will the employee be a full time, part time or casual worker? And is the contract fixed term or open ended?

"There is a need to send a message to the community at large, and small employers particularly, that the correct entitlements for employees must be paid," Magistrate Hawkins said.

Three defendants from the café were then penalised a total of $120,000 in addition to orders relating to the payment of wages, superannuation and interest paid to the former employees.

In the case of Compumark v Fair Work Ombudsman the directive of back payment was ignored and the director of the company initiated the steps to dissolve the business which appears to be a way to avoid paying the outstanding underpayment of wages and orders by the magistrate.

The Fair Work Ombudsman is now taking action in the Federal Court as a supporting creditor in proceedings aimed at securing a court order for Compumark to be "wound up" if the company is insolvent by not complying with the back-payment and penalty orders.

Fair Work Ombudsman Nicholas Wilson says that if Compumark is wound up, a liquidator will examine the company to determine whether it has any assets that can be liquidated to meet the back-payment and penalty orders.

Employers, particularly small business employers, need to ensure they have wages under control because even small underpayments can compound into significant retrospective entitlements over a period of time.

The Compumark case demonstrates that the wages bill is significantly lower than the penalties and legal costs that arise from these cases.

This article was written by the workplace relations team at Restaurant & Catering Australia. Contact them on 1300 722 878