A recent court case brought forward by the Fair Work Ombudsman (FWO) has reinforced the need for managers and directors to ‘take great care before taking part in conduct that may breach safety net entitlements or involve Award underpayments’.
In the court proceedings of Fair Work Ombudsman v Step Ahead Security Services Pty Ltd and Another, private security firm Step Ahead Services was found to ‘have paid eight casual security staff flat hourly rates of $20 on weekdays, $25 on weekends and $30 on public holidays’.
‘Separate overtime and other penalties in the Security Services Award 2010 were also not provided’. This resulted in a total of $22,779 of unpaid Award wages over a three month period between May and August 2014.
The Federal Circuit Court found that the company had ‘engaged in numerous breaches of the Award by failing to provide the correct minimum wage; the Award casual loading; the required night span; Saturday, Sunday and public holiday loadings; overtime rates and the minimum four hour shifts to certain employees’.
Due to the company’s deliberate and ‘blatant disregard’ of the Act, $257,000 of civil penalties were ordered against the company. ‘The director was also ordered to pay $51,400 in penalties on the basis that he was knowingly involved in the company’s conduct’.
As a result of the company not paying the arrears of wages by the time of the hearing, the FWO ‘sought orders that the company pay the arrears. However, because there were fears that the company would be wound up, the FWO also sought orders that the director should personally be liable for the arrears’.
The Federal Circuit Court ordered that the director was jointly and severally liable to repay the $22,779 alongside the company. ‘The Court considered this was consistent with public policy, and would go ‘some way’ to requiring that those in control of companies take steps to ensure that they meet their obligations as they arise and to preventing those who breach the Act from keeping the benefit of their misconduct’.
Australian law practice HR Legal has described the case as ‘a new development, as it ‘represents a significant expansion of the scope of the orders that have usually applied under the Act’.