New onus of proof on employers facing underpayment allegations

importance of immigration compliance

The Fair Work Ombudsman (FWO) has commenced the first legal action utilising new reverse onus of proof laws that require employers to disprove underpayment allegations in Court when they have failed to keep adequate time and wages records or issue pay slips.

The FWO has instituted proceedings in the Federal Circuit Court against A & K Property Services Pty Ltd, which operates two ‘Sushi 79’ fast food outlets in Queensland, and company directors, Yong Sim Kim, Hyn Jun Kang and Jungpyo Lee.

The FWO alleges that A & K Property Services breached workplace laws by failing to keep proper time and wages records, and failed to issue pay slips to employees.

The FWO also alleges that nine workers were underpaid a total of $19,467 in entitlements under the Fast Food Industry Award 2010.

The workers were allegedly underpaid minimum ordinary hourly rates, weekend penalty rates and overtime rates. Allegedly, the employees were also not provided with superannuation, and their annual leave and personal leave entitlements were not accrued.

The workers were all South Korean nationals, aged in their 20s and early 30s, who were in Australia on working holiday, student and vocational education visas.

Acting Fair Work Ombudsman Kristen Hannah highlighted the significance of applying the new legal provision, which is available for conduct occurring after September 2017.

“In the past some employers had avoided facing litigation by FWO because they had breached their record-keeping obligations, and we could not present sufficient evidence in Court to prove underpayments,” Ms Hannah said.

“Employers should be on notice that this loophole is now closed and the Fair Work Ombudsman will make full use of the new laws to protect vulnerable workers. Businesses who don’t meet record-keeping or pay slip obligations and can’t give a reasonable excuse need to disprove allegations of underpayments in Court,”

A & K Property Services faces penalties of up to $63,000 per contravention.

Mr Kim, Mr Kang and Mr Lee are facing penalties of up to $12,600 for their alleged involvement in the leave contraventions and, in addition to those contraventions, Mr Kim is facing penalties of up to $12,600 for his involvement in the record-keeping and pay slip breaches.

The matter is listed for a directions hearing in the Federal Circuit Court in Brisbane on 25 March 2019.

What this means for employers

If this case is successful it will make it a lot easier to prosecute businesses who fail to keep adequate employment records such as records of payments, hours worked and visa conditions of employees.

Businesses will also be forced to disprove any allegations of underpayments in Court more often, as the reverse onus of proof will be placed on them. It is essential that you keep adequate personnel records to minimise the risk of prosecutions or penalties.

Employers should be familiar with the new Protecting Vulnerable Workers Act which is aimed at protecting the rights of vulnerable workers particularly migrant workers.

The Act also imposes liability on franchisors and holding companies (a company that has control over subsidiary companies), they can be held responsible if their franchisee or subsidiary doesn’t follow workplace laws. This applies to franchisors that have a significant amount of influence or control over the business affairs of the franchisee.

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