Melbourne hairdresser cops $70,000 fine for underpaying apprentice

A Melbourne hairdressing chain has been fined a total of $70,224 after the Federal Circuit court found operators had underpaid a young apprentice $8625.

The litigation follows a crackdown on the hair and beauty industry by the Fair Work Ombudsman last year.

Cuts Only The Original Barber, a hairdresser based in the Melbourne suburb of Endeavour Hills, received a fine of $50,160 from Judge Riley on Friday, while operators Paul Mark Salter and George Dimaris were each fined $10,032.

The men admitted their company underpaid a 21-year-old apprentice at its GP Studio salon in the Chadstone shopping centre in 2012, but told the court the underpayments were the result of misinformation they received from TAFE, via the manager of the Chadstone store.

The Fair Work Ombudsman found the company had decided to pay the employee based on her competency rather than years of service, despite being given advice by the watchdog that she was not enrolled in a competency based apprenticeship and was entitled to progress to a higher wage rate each year of the apprenticeship.

The apprentice was not paid at her third year apprentice minimum hourly rate and was also underpaid overtime rates, annual leave entitlements and penalty rates for weekend and public holiday work.

“I consider that the breaches were deliberate, as opposed to accidental or the result of a clerical error,” said Judge Riley.

“… it is incumbent upon employers to accurately ascertain their employees’ entitlements. Moreover, the respondents’ submissions about misinformation do not have any impact on the failure to pay the employee her leave loading and accrued annual leave on termination.”

It was found Salter and Dimaris were closely involved in the breaches.

Judge Riley also noted Cuts Only, which operates 17 salons across Melbourne, and its associated companies had been the subject of 10 underpayment complaints between 2006 and 2012, each resolved by way of payment to employees.

Andrew Douglas, principal at M+K Lawyers, told SmartCompany there are a number of small business industries, such as hairdressing, where it is common for employers to misunderstand complex industrial relations laws.

“These are industries where employees are young and vulnerable,” says Douglas, who points out the Fair Work Ombudsman has been playing close attention to such industries.

But Douglas says this case appears slightly different, as there seems to have been a clear understanding by the employer about their obligations.

“That’s why the fine is so huge; because it appears they knew and took advantage.”

“But for every person doing it deliberately, there will be 100 accidentally doing something because of complex industrial relations laws. Employers must make sure they know the rules before they start and apply them properly.”

SmartCompany contacted Cuts Only The Original Barber for comment, but did not receive a response prior to publication.

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