Asian grocery importation business fined $130,000 for negligent underpayment

A Melbourne-based grocery importation business has been fined almost $130,000 for breaching the trust of the managing director’s cousin by underpaying the East Timorese truck driver more than $120,000.

Following Fair Work Ombudsman action, the court ruled Dandenong-based business Lay Brothers repay the truck driver $124,816 and pay a penalty of $128,700.

The underpayments occurred between 2007 and 2011 while the East Timor immigrant was working up to 60 hours a week as a delivery truck driver.

The employee was paid a flat hourly rate of $10 to $11.50 an hour, despite being entitled to at least $14 to $16 an hour under award rates and more than $20 an hour on weekends and overtime.

The incident of transport workers being underpaid is an all too common one. In February this year the operators of Symes Transport in Bendigo were ordered to back-pay 44 employees a total of $227,207.

Because of the prevalence of underpayment in the industry, the federal government established a Road Safety Remuneration Tribunal which began operating in July 2012 and hears transport industry underpayment cases.

Workplace law expert Peter Vitale told SmartCompany organisations such as the Transport Workers Union are always concerned by the widespread mistreatment of workers in the sector.

“In this case what you’re really talking about appears to be someone who was underpaid when he was entitled to award rates and had a lot of the characteristics of the type of vulnerable worker that the FWO has very clearly indicated it seeks to protect,” he says.

“You can see in the result of this case an example of exactly how the courts view a failure for an employer to inform itself of its obligations to its employees.”

The case was uncovered following a complaint to the FWO by the employee.

Judge Frank Turner said in his judgment withholding such large amounts of pay from the employee was a serious offence.

“[The employee] was a cousin of the respondent’s managing director – he was entitled to trust him – that trust was breached to a very serious extent,” Turner says.

“There is no proof that the underpayments were deliberate, but at best they must have resulted from a failure by the respondent to enquire about the correct entitlements, therefore they resulted from negligence.”

In the eyes of the law, ignorance of workplace obligations is no defence.

“Ignorance of the law is no excuse. An employer must ascertain the correct entitlements and accord them,” Turner says.

Vitale says the onus is on employers to ensure they understand their legal obligations.

“Ignorance of these obligations, whether it’s deliberate or by omission, is unacceptable,” he says.

SmartCompany contacted Lay Brothers, but no response was available prior to publication.

Vitale says in more recent times the FWO has only commenced legal action when it deems it necessary, taking on a more educational role and instigating mediations to resolve underpayment cases.

“This is leading to a significant number of satisfactory resolutions before it becomes necessary for the authority to conduct a full investigation,” he says.

“But it’s important to bear in mind the Ombudsman has always made clear it reserves the right to commence legal action in exceptional circumstances.”

Legal action is more likely to occur when there have been systematic breaches, delays from the employer in repaying underpayments or when the business has not cooperated with the FWO’s investigations.