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Dentist penalised for non-compliance and personally ordered to rectify underpayments

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Brace yourself for consequences

The Fair Work Ombudsman (FWO) is responsible for ensuring compliance with workplace laws.

The Fair Work Ombudsman (FWO) is responsible for ensuring compliance with workplace laws. It does this by investigating and taking enforcement action against suspected breaches of the Fair Work Act 2009 (Cth) (FW Act).

Under the FW Act, one of the enforcement powers of the FWO is to issue a compliance notice requiring the employer to address contraventions of the FW Act. Failing to comply with this compliance notice has serious consequences and itself constitutes a contravention of a civil remedy provision.

In the matter of Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor [2019] FCCA 1148, the FWO sought an order against the sole director and secretary of the dental practice for his involvement in failing to comply with a compliance notice in relation to the underpayment of a dental technician.

In July 2017, a Fair Work Inspector investigated the dental practice and reasonably believed that it had contravened the Health Professionals and Support Services Award 2010 and the National Employment Standards (NES) by failing to pay the minimum entitlements owing to the dental technician. In February 2018, a compliance notice setting out the details of the contraventions was served on the dental practice and personally served on the director. The compliance notice required the dental practice to rectify the underpayment to the dental technician.

The dental practice did not comply with the compliance notice by the required date and the FWO commenced proceedings in the Federal Circuit Court (the Court).

In the proceedings, while the dental practice admitted it did not comply with the compliance notice, the director denied that he was “involved in” the contravention of the compliance notice. He also submitted that to comply with the compliance notice, he would have had to contribute money to the dental practice to make the payment requirement and there was no obligation on him as a director to do so.

The Court rejected the director’s submissions, finding that the director was involved in the contravention within the meaning of section 550 of the FW Act and was an “intentional participant in the contravention” by the dental practice.

Relevantly, the Court noted that the director received the compliance notice on behalf of the dental practice and was aware of its contents and the compliance date and was the “guiding mind” of the dental practice as its sole director. The Court also considered that the director was “knowingly concerned” in the contravention as there was a “practical connection” between the director’s actions and the contravention – it was the director who decided that the dental practice would not comply with compliance notice.

In Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor (No.2) [2019] FCCA 2144, the Court ordered that the director pay a penalty of $5,355 for his involvement in the contravention. It noted that the director did not rectify the underpayment, admit liability or demonstrate any remorse. It also held that there was a need for deterrence, stating that:

It is important… that recipients of statutory notices such as Compliance Notices act in accordance with such notices. The efficacy of such notices will be hindered or made redundant if recipients perceive that failure to comply with such notices carries with it no meaningful consequence.

Significantly, given that the dental practice was in voluntary administration, the Court also considered it appropriate to make a personal payment order. The Court ordered that the director personally pay the amount of $32,889.98 plus interest to the dental technician, being the amount sought under the compliance notice for the underpayment.

Lessons for employers

The FWO has different enforcement powers available to use to ensure compliance with the FW Act.

Compliance notices are one enforcement mechanism used by the FWO to quickly resolve underpayment claims. It is important for employers to be aware of the legal significance of these compliance notices and that there are real consequences for failing to comply with them.

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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