Cleaning recruitment company washes up in court for alleged $130,000 in unlawful wage deductions

A recruitment and labour hire company is set to face court for allegedly falsifying its employment records and unlawfully deducting around $130,000 in wages from dozens of cleaners on its books.

The Fair Work Ombudsman has initiated civil proceedings in the Federal Circuit Court against Melbourne-based company Oz Staff Career Services for the alleged misconduct.

The company’s sole director, Travice Blom, and a third person employed as a manager at the company are also facing court action.

The FWO alleges that Oz Staff Career Services unlawfully deducted a total of $130,183 from the wages of 102 employees between December 2011 and May 2013.

The range of alleged underpayments for individual employees began at $5 and went to $2246.

The action comes following a Fair Work inspection of the payments of 102 employees of the company in 2012.

It is alleged that Oz Staff Career Services on-hired the employees to a third party to undertake cleaning work at Melbourne venues including Federation Square and Crown Casino.

Papers lodged in court allege that the company deducted “administration fees” of around $25 per week from staff, while “meal fees” were also deducted.

The FWO proposes that these deductions were unlawful, they were not for the benefit of the employees and they were not authorised by the employees.

It is alleged that Oz Staff Career Services provided FWO inspectors with false and misleading records that did not contain details of the deductions.

If proven, Oz Staff Career Services faces maximum penalties of between $33,000 and $51,000 per breach, while the individuals each face maximum penalties ranging from $6600 to $10,200 per breach.

Fair Work Ombudsman Natalie James said the seriousness of the alleged breaches and the involvement of vulnerable workers are significant factors in the decision to take legal action.

The FWO is seeking penalties and a court order for any underpayments to be rectified. It also wants staff informed of the legal action, and compliance training for the director and manager of the company.

K&L Gates partner in the Labour, Employment and Workplaces Serves Group, Christa Lenard, told SmartCompany the alleged situation of deducting fees was “not a very common thing”.

Lenard says normally payment issues involve breaching Award conditions via underpayment or failure to comply with penalty rates.

“If an ‘administration fee’ is included on a payslip it should raise alarm bells,” she says.

Lenard says if a labour hire company were to argue that “administration fees” related to the hiring out of the employee to a third party, this could be a breach of their industry Award.

Lenard explains that the company originally employing the staff should take care of the employee wages and ensure the minimum terms of their Award are adhered to.

There would likely be an overriding contract between the labour hire company and the external business, which would take into account any administration fees, she says.

When it comes to ‘meal deductions’, employers need to check their industry Award, as it could stipulate that a meal is provided to staff, or a meal allowance is provided in certain circumstances, Lenard explains.

Lenard warns small business owners in particular that due to their hands-on involvement in all aspects of their business that they could be liable for fines if they are found to have been knowingly involved in payment breaches.

The directions hearing for Oz Staff Career Services is listed in the Federal Circuit Court in Melbourne on March 6.