For many businesses it can be difficult to navigate the requirements of employing and paying staff the correct entitlements. At times some businesses however deliberately unpaid their staff. A recent start-up business was fined heavily & made an example of for underpaying staff.
Her Fashion Box Pty Ltd (a Sydney based start-up company) was penalised $274,278 and the director Kathleen Purkis was penalised $54,855, in the Federal Circuit Court. Fairwork Ombudsman has secured $329,133 in penalties against the start-up company for underpaying workers over $40,000, including allegedly engaging one of the workers as an unpaid intern, when she was actually a part-time employee.
Between 2013 and 2015 it was found three employees aged in their mid 20’s were underpaid $40,543 for their entitlements which included their minimum hourly rates, overtime, public holiday and annual leave pay.
One employee was a graphic designer who had completed a university degree and worked two days a week for nearly 6 months without pay under a alleged ‘unpaid internship’ – the employee received a one off payment of $1,000. The employee was underpaid $6,913. Inspectors investigated after receiving underpayment complaints from the young workers said Fair Work Ombudsman Sandra Parker.
By labelling employees as interns does not mean you can avoid paying lawful entitlements to your employee. Australia’s workplace laws state that if people are performing productive work for a company, they are by law entitled to be paid minimum award rates. Unpaid placements are lawful when they are apart of a vocational placement related to a course of study. Exploitation of workers when they are fulfilling the role of an employee is prohibited. Her Fashion Box underpaid another graphic designer $15,511 over a period of two years of full-time work – evidence was given by the worker that he was left struggling to pay for basic living expenses. The third employee was engaged on a full-time basis and was underpaid $18,119 over one year.
All three employees have been paid back in full.
Judge Manousaridis found that Ms Prukis was not paying her workers the amount they were entitled to for work performed. Judge Manousaridis felt a large penalty was required to deter others from similar conduct, “The penalty should be set at a level that, having regard to the other circumstances of the case, should signal to employers who might be tempted not to inquire into their legal obligations as employers or not to comply with their legal obligations, particularly in relation to inexperienced workers, that there is a significant risk of being exposed to the imposition of a pecuniary penalty if they are to succumb to such temptation.”.
Her Fashion Box also breached the law by failing to comply with four notices to produce records and documents issued by inspectors from Fair Work.
Source: www.fairwork.gov.au
Title: Fashion start-up penalised over unpaid internship.
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