The business operators said it would comply with back payments if the underpaid worker provided a statement saying that she had been “kidnapped” and “forced to work against her will”.
This was deemed unacceptable by the Fair Work Ombudsman (FWO), who took the issue to the Federal Circuit Court following several failed attempts to have the restaurant reimburse the employee the $5000 it owed her.
Judge Grant Riethmuller also ordered the owner-operators of the restaurant to pay a $15,500 penalty.
The total consists of fines given to David Peter Anderson, the operator of the Curry Garden Indian Restaurant in Bendigo, and the restaurant itself, which he co-owns with his wife.
When the worker was employed at the restaurant in May 2012, she was paid a flat rate of $12.50 per hour, which later increased to $15.50 an hour.
Under the Restaurant Industry Award, she should have been paid $16.57 an hour for normal hours and $34.11 for weekend and public holiday work, which led to her being underpaid a total of $5000.
Judge Riethmuller found that the FWO had attempted to deal with the underpayment using a contravention letter which requested it be rectified.
This was when Anderson responded with his demand that the employee give a statement that she was kidnapped and forced to work for him against her will.
“Not surprisingly, the Fair Work inspector advised that such bizarre conditions would not be met,” Judge Riethmuller said in his decision.
It was also found that Anderson had refused to respond to a Compliance Notice sent to him by registered mail. According to Anderson, he had responded by “claiming that the employee had agreed with the rates that were paid and not complained about the rates”.
The Fair Work Act states that employers must comply with Compliance Notices issued by Fair Work inspectors unless they have a reasonable excuse, or make a court application to challenge the notice.
The judge ruled that Anderson had shown no remorse for his “deliberate” breaches of workplace laws, labelling his decision to ignore the Compliance Notice as “extraordinary”.
Judge Riethmuller added that although the business owners had admitted to their wrongdoing, it was “more an acceptance of liability rather than an acknowledgement of the inappropriateness of the conduct”.
He also said that the penalty needed to be imposed in order to “recognise the importance of general deterrence, particularly given that this contravention occurred in an industry where rates of non-compliance with the minimum obligations to employees are high.”
“This case demonstrates that employers who refuse to co-operate and promptly rectify underpayments can face a significant fine on top of the requirement to back-pay employees in full,” said Fair Work Ombudsman Natalie James. “Successful litigations such as this also benefit employers who are complying with workplace laws, because it helps them to compete on a level playing field.”
She added that the decision also acts as a reminder to employers that it is not possible to ‘contract-out’ of minimum pay laws by asking employees to accept a lower rate.
A Bendigo restaurant was recently asked to back-pay a casual employee who had been underpaid, but refused to do so unless its bizarre request was granted.