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$200,000 penalty imposed for adverse action taken against employees underpaid because of their race

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Losing on penalties

Fair Work Ombudsman’s (FWO’s) successful prosecution of a hotel operator and its owner who took adverse action against two employees because of their Chinese race and Malaysian extraction.

Last year in The INNS and outs of adverse action: FWO prosecutes hotel owner for underpaying employees because of race. we reported on the Fair Work Ombudsman’s (FWO’s) successful prosecution of a hotel operator and its owner who took adverse action against two employees because of their Chinese race and Malaysian extraction.

Yenida Pty Ltd operated the Scamander Beach Hotel where a husband and wife were employed as the head chef and kitchen hand respectively.

The Federal Court of Australia held that the hotel operator and owner took adverse action against the couple when treated them differently to other employees by:

  • paying them a set salary or fixed rate of pay;
  • requiring them to work six days per week; and
  • not paying award entitlements.

The Court held that this adverse action was the result of discrimination based on the couple’s Chinese race and Malaysian extraction.

The couple were collectively underpaid a total of $29,326.19. In addition, 15 other casual hotel employees were underpaid over $26,000.00.

In May 2018, the Court issued its penalty decision in relation to this matter (Fair Work Ombudsman v Yenida Pty Ltd & Anor [2018] FCCA 1342). The Court ordered the employer to pay a penalty of $176,005 for contraventions of the Fair Work Act 2009 (Cth). A separate penalty of $35,099 was ordered against the hotel owner for his involvement in the contraventions.

In imposing the penalties, the Court took into account that the conduct was objectively serious in that the employees were vulnerable and exploited as they had little understanding of Australia’s workplace laws and were dependent on employment in order to remain in Australia.

The Court also accepted that there was a need for specific deterrence as the hotel owner had moved on to managing another motel and that there was also a need for general deterrence for the accommodation and food industry.

The successful prosecution by the FWO in this case and the penalty imposed by the Court indicates that the exploitation of vulnerable workers, including by underpaying wages, will be considered seriously by the Courts. This case is also a further reminder to employers to pay all employees their minimum entitlements, regardless of visa status.

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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