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Expensive penalties and massive back-pay for ignoring a compliance notice

Employers who underpay their staff are breaking the law and taking a huge risk.

A Melbourne dentist has been penalised $5,355 and ordered to back-pay a former employee $32,889 plus interest, following legal action by the Fair Work Ombudsman.

Last year, Fairwork issued a Compliance Notice to the dental practice, but the notice was ignored.

“Fair Work Inspectors are increasingly using Compliance Notices to address underpayments and we will not tolerate them being ignored,” said Fair Work Ombudsman Sandra Parker. “The clear message to employers is that if you don’t comply with the terms of a Compliance Notice, we won’t hesitate from taking you to court to enforce them and seek additional penalties.”

Earlier this year, Fairwork secured $335,664 in penalties for underpaying workers at 7-Eleven outlet and restaurant. Now, Fairwork is currently investigating Subway following claims by employees of systemic underpayment across the entire franchise network.

Then there’s the high-profile under-payments scandal by restaurateur George Calombaris, so far resulting in back-payments totalling $7.3 million to 515 current or former employees, with new claims still being investigated.

Employers who underpay their staff are breaking the law and taking a huge risk.

As a manager or business operator, it is crucial that you are aware of your obligations – the potential penalties for such infringements have never been higher. Changes made by the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 mean companies involved in serious contraventions now face penalties of up to $630,000 per contravention. The maximum penalties for individuals are now $126,000 per contravention. The Act also doubled the maximum penalty for failing to keep employee records or issue pay slips to $63,000 for a company and $12,600 for an individual, and tripled the maximum penalty for knowingly making or keeping false or misleading employee records to $12,600 for an individual. A reverse onus of proof can also now apply, meaning that employers who don’t meet record-keeping or pay slip obligations and can’t give a reasonable excuse will need to disprove allegations of underpayments made in a court.

Does your business comply with workplace legislation? All employers need to ensure that they are complying with all relevant workplace legislation to avoid the potential risks. WorkPlacePLUS has a specialised HR team that can support employers to meet their workplace obligations.

Please contact us today to find out about our independent HR Audits & Reviews.

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