Sydney Builder in court for underpayment of employee entitlements

The Fair Work Ombudsman (FWO) has announced that they have commenced legal action against the operator of a residential construction business in western Sydney, as well as one of its directors.

The FWO office began an investigation after it received a request for assistance from a worker who had been employed by the company as a carpenter between January 2019 and July 2021.

A Fair Work Inspector issued a Compliance Notice to the construction company in December 2021 after forming a belief that the worker had not been paid all entitlements owed under the Building and Construction General Onsite Award 2010, the Building and Construction General Onsite Award 2020 and the Fair Work Act.

The inspector formed a belief that the worker was paid an hourly rate of $23.10, resulting in the underpayment of his minimum hourly rate and determined that the worker was also underpaid redundancy entitlements and payment-in-lieu-of-notice at the end of his employment.

The FWO alleges the construction company, failed to comply with the Compliance Notice without reasonable excuse, which required it to calculate and back-pay the worker’s entitlements. It is alleged that the director was involved in the contravention.

FWO enforcing compliance

The FWO said that “Where employers do not comply, we are prepared to take appropriate legal action to ensure employees receive their lawful entitlements,” adding that “A court can order a business to pay penalties on top of having to back-pay workers”.

The FWO is seeking penalties against the construction company of up to $33,300 and the director faces a penalty of up to $6,660 for allegedly failing to comply with the Compliance Notice and is also seeking an order for the construction company to comply with the Compliance Notice, which includes rectifying any underpayments in full, plus interest and superannuation.

Ignorance is no defence

Many underpayments are unintentional, arising because employers or their payroll staff do not understand how the relevant award applies, or that there is an award at all. In another recent case the Federal Circuit and Family Court has made it clear that ignorance of the law is no defence when it penalised the operators of an Indian takeaway-food business $42,336 for underpaying 17 employees more than $63,000.

If you are not closely acquainted with the terms of the modern award that applies to your workforce, we recommend that you have an independent audit to ensure that you are operating your business in accordance with the terms of that award and are paying your employees no less than the minimum entitlements it provides.

If you would like more information about how modern awards apply to your business, or would like to arrange for an independent audit, Active Law can assist you. You can contact us at 07 3160 0000 or email us at reception@activelaw.com.au.

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