Fair Work slams “abhorrent” Tasmanian resort Maclean Bay with record penalty for sham contracting

The operators of a Tasmanian resort who attempted to fire employees after they refused to sign new employment agreements have been slammed by the Federal Court for sham contracting and punished with a record fine of $295,000.

The same operators were forced to provide their employees with back-pay in January after the Court heard the resort owner dismissed the six staff who refused to become independent contractors.

But Justice Marshall of the Melbourne Federal Court said some compensation hasn’t even been paid yet.

“If that is not immediately possible from the resources of Maclean Bay, those who stand behind it should have the decency to attempt to remedy their corporate entity’s failure to comply with the law rather than cowering behind the corporate veil,” Justice Marshall said.

Fair Work Ombudsman Nicholas Wilson said this is yet another message sham contracting won’t be tolerated.

“Inadvertent misclassification of employees as contractors does occur – but when that misclassification is done deliberately or recklessly by an employer to avoid providing employees their lawful entitlements and workplace rights, that amounts to sham contracting.”

Justice Shane Marshall of the Melbourne Federal Court took the owners of the Maclean Bay Pty Ltd Diamond Island resort to task with a $294,360 penalty. Wendy Wells, who owned the resort along with her husband, was penalised an additional $13,860.

The highest previous penalty was handed down in 2009 when a cleaning company was fined $288,000 for underpaying staff.

The court heard Maclean Bay had attempted to convert resort employees into contractors in order to save money, with Justice Marshall calling the behaviour “exploitation” and “abhorrent”, demonstrating “breathtaking arrogance by an uncaring employer”.

“Maclean Bay needs to have it driven home that its conduct was unacceptable by community norms of decency and respect for fellow human beings, as well as being a breach of this country’s labour laws,” Marshall said.

The court heard between 2008 and 2009 the company dismissed four housekeepers due to entitlements they received under employment.

The business also was found to have engaged in sham contracting as a few employees were actually performing employee-related duties, and didn’t receive benefits.

A gardener and a receptionist were dismissed for refusing to become contractors as well. The receptionist was a key part of the case, with Marshall saying she was treated extremely poorly.

“Rights are a mere shell unless they are respected. Employers need to understand that they cannot, with impunity, treat their employees the way Maclean Bay treated (the receptionist),” he said.

“Her treatment by Maclean Bay was disgraceful and showed a complete lack of care for the dignity of a hard-working, loyal employee.”