Employer misclassifies Nepalese students as 'independent contractors'
A Sydney-based cleaning services provider and its ex-manager were punished in court with fines of $124,186 for the underpayment of two visa holders and submitting false documents.
The Federal Circuit and Family Court of Australia has issued a fine of $105,840 to Green Clean (Aust) Pty Ltd and a separate fine of $18,346 to the former manager.
Green Clean and its former manager confessed to disregarding workplace laws by not paying two casual cleaners, failing to provide pay slips, and consciously or carelessly fabricating false or misleading documents for a Fair Work Inspector, leading to penalties.
Between March and June 2019, Green Clean incorrectly identified two Nepalese international students as independent contractors, thus resulting in their underpayment.
Misclassified as independent contractors
The FWO acted following the appeal for help from the employees who had been affected.
Fair Work inspectors uncovered that Green Clean had not compensated their employees the minimum wages, casual loading, broken-shift allowance, penalty rates, overtime entitlements and superannuation due under the Cleaning Services Award 2010.
Additionally, their workers were not paid the amounts owed to them within seven days of them leaving.
During the inquiry, an inspector handed Green Clean a Notice to Produce, which required the company to deliver certain records or documents, such as those connected to terms of engagement.
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Green Clean’s ex-manager gave the inspector emails, which they allegedly sent to the two employees in question in the spring of 2019. Along with these emails were “independent contractor arrangements,” outlining the terms of their employment with the company.
The FWO found that Green Clean and the previous manager confessed that the two emails had not been transmitted to the employees during March or April 2019.
The court determined that the failure to pay the right amount was due to Green Clean’s alleged use of the workers “as independent contractors, but in fact, they were casual employees, and the respondents were aware of this fact and the Cleaning Services Award.”
For the second time, the Fair Work Ombudsman (FWO) has enforced penalties against Green Clean. In 2016, the FWO ordered a penalty of $9,450 to be paid by the organisation due to their failure to comply with a compliance notice which required them to reimburse two Filipino international students they had employed.
The purpose of penalties
The court explained that a penalty’s “primary purpose” is to “promote the public interest in compliance.”
It is “to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act,” it said.
The “price” must be such that it is not regarded by the violator as an “acceptable cost of doing business,” it added.
The court said the six-figure penalty was “appropriate” since it was serious misconduct, as international students are often unaware of Australia’s minimum labor standards.
Ruling on the case, it said it was not an isolated incident where Green Clean had neglected to pay its employees on student visas the correct amount.
He further noted that it is necessary to prevent similar breaches in the future because they could harm the entire workplace relations system and its enforcement.