The owner of a collapsed Brisbane-based cleaning company has been penalised a record $126,540 and ordered to back-pay migrant workers almost $60,000, in a result that sends a warning that individuals can be held personally liable for exploitation of workers.
The Federal Circuit Court judgment against Brisclean Pty Ltd owner, Bijal Girish Sheth, is the result of legal action by the Fair Work Ombudsman.
The penalty – which Sheth must pay in addition to the back-pay order – is the highest ever secured by the Fair Work Ombudsman against an individual.
Sheth was centrally involved in his cleaning company Brisclean breaching sham contracting laws by deliberately misclassifying four employees as independent contractors and underpaying them a total of $59,878 between August 2012 and December 2014.
A fifth employee was also exploited but the underpayment of the worker could not be quantified due to a lack of records.
The five affected workers – including two Indian visa-holders and three immigrants who are now permanent residents – were all from non-English speaking backgrounds.
The exploitation of the workers occurred despite the Fair Work Ombudsman having previously cautioned Sheth and his company about sham contracting and having investigated 15 previous underpayment allegations against them.
Brisclean could not be pursued in court after it was placed into administration last year – but the Fair Work Ombudsman used the accessorial liability provisions of the Fair Work Act to take legal action against Sheth.
Penalty a warning to “rogue operators”: Ombudsman
Fair Work Ombudsman Natalie James says the outcome of the matter serves as a warning to the minority of rogue operators in Australia that steps will be taken to hold them personally liable if they are involved in exploiting workers.
[quote]“Even if you liquidate your company, it’s no guarantee of avoiding the consequences of non-compliance with the Fair Work Act,” James said.
“Any rogue business operator who thinks they can short-change workers and get away with it by shutting their company down should think again.” [/quote]
“We will seek to hold you to account at every available opportunity and you should be aware that we treat exploitation of vulnerable, migrant workers particularly seriously.”
It is believed Sheth is now operating his Brisbane cleaning business under a new corporate entity and the Fair Work Ombudsman will refer the matter to the Australian Securities and Investments Commission.
Three of the five affected workers often worked late-night shifts cleaning commercial premises, while one primarily cleaned cars and one cleaned hotel rooms.
Flat rate as low as $7
Sheth’s company paid them flat rates as low as $17 an hour and did not pay them at all for some work performed.
This resulted in underpayment of their minimum hourly rates, annual leave entitlements, part-time and shift loadings, and penalty rates for weekend, public holiday and overtime work.
Sheth also contravened record-keeping and pay-slip obligations and failed to comply with three Notices to Produce employment records issued by Fair Work inspectors.
The workers were underpaid individual amounts of $26,492, $22,545, $6679 and $4162.
The court has ordered that part of the penalty imposed on Sheth be paid to the workers to rectify the underpayments, if Sheth does not comply with the back-pay order.
Ms James says the penalty and back-pay order imposed against Sheth also sends a message about the seriousness of sham contracting activity.
[quote]“Business models that involve exploitation of vulnerable workers are not acceptable and will not be tolerated,” she added. “Where there is evidence of sham contracting occurring, the Fair Work Ombudsman and the Courts will look behind the often carefully crafted legal documents and structures to determine the true state of affairs for affected workers.”[/quote]
Ms James says the cleaning industry, which employs a significant number of vulnerable workers, will continue to be a priority for her agency.
The penalty against Sheth comes after the Fair Work Ombudsman revealed it had recovered $1.9 million for 1500 cleaners at Oaks Hotels & Resorts Ltd after they were misclassified as independent contractors and subsequently underpaid.