The role of the Fair Work Ombudsman includes ensuring employers are compliant with Australian Workplace Laws and safeguarding the protection of vulnerable workers from exploitation. In addition to an already extensive list of powers, the FWO has jurisdiction to investigate claims of workplace discrimination on the basis of factors such as race, sex, age and pregnancy.

In its first racial discrimination case, the FWO has successfully sought a $200k penalty against a former Tasmanian Hotelier who significantly underpaid two Chinese workers and treated them differently to their Australian colleagues. The FWO found that the company had breached the discrimination provisions of the Fair Work Act by underpaying the husband and wife employees over $28,000 and by requiring them to work extra hours. It was also found that the company failed to correctly record their hours of work. 

Before the Federal Circuit Court, the FWO argued that the employees’ Malaysian and Chinese backgrounds were a “substantial and operative reason” behind the treatment. Evidence was presented to the court that the hotel operator, also of Chinese extraction, used his similar cultural background by referring to the couple as ‘family’, which enabled him to put pressure on the employees to work hard for him. It was argued that he deliberately chose to recruit employees from Malaysia because “he knew that it was usual in Malaysia to work six or seven days”.

The court found that that the husband, who was recruited as the head chef for the hotel restaurant, was required to work six days per week, working a total of between 33 and 57 hours. He often started work when the restaurant opened for lunch and finished after it closed for dinner. Between 2010 and 2014, the husband was paid an annual salary of $45,240 to $46,280, which was not sufficient to cover the penalty rates he was entitled to for weekend, public holiday, evening and overtime work. This equalled a total underpayment of $20,550. 

The wife, who was employed as a kitchenhand, was required to work between 35 and 51 hours per week for which she was paid a weekly flat rate of between $446 and $594. This was approximately half of what she was entitled to, which led to an underpayment of $8775 over a period of just four months. The employee quit due to the pressure of the work demands.

The judged noted that that the failure to keep records of the hours worked by the employees demonstrated “a complete disregard” of the employer’s obligations to them. In contrast, the company required Australian employees to work five or fewer days per week and paid them minimum hourly rates, penalty rates and loadings, and were generally complaint with the Hospitality Industry (General) Award 2010.

The judge concluded by stating that the penalties imposed should deter hospitality industry employers from underpayment and record-keeping contraventions. Employers were reminded of the recent FWA changes designed to protect vulnerable workers which includes significantly higher penalties for a range of contraventions, including serious record-keeping breaches.

Lessons for employers

• Be aware of your obligations under the FWA and ensure that no employee, or prospective employee, is discriminated against on the basis of their race, colour, sex, sexual preference, age, physical or mental disability, marital status etc.
• Employers must know the award applicable to their employees to ensure compliance and employees are to be afforded the minimum entitlements set out in the award.
• Review your record keeping system and the way pay-slips are issued.
• Become familiarised with the recent FWA changes following the passage of the Fair Work Amendment (Protecting Vulnerable Workers) Bill in September last year.
• If the FWO undertakes an investigation within your business, employers are advised to provide as much assistance as possible to allow the FWO to conduct their investigation.