Organisation fined thousands for lousy wages

by Cameron Edmond14 Oct 2013

In a decision by the Federal Circuit Court, Australian Sales and Promotions Pty Ltd has been fined $23,100 for paying five door-to-door sales staff $50 for 450 hours of work.

The Fair Work Ombudsman stated legal action was launched against the company after an investigation based on complaints from the workers.

Aged in their 20s, the workers carried out a cumulative total of 450 hours of work in 2011, going door to door to promote Energy Australia, and were paid only $50. The Fair Work Ombudsman stated they should have been paid more than $9,200.

While two of the workers were young Australians, three were foreigners - – two American, and one a Taiwanese woman who spoke little English.

While the organisation maintained that the workers were contractors, Judge Hartnett stated: “These contraventions (of workplace law) involved not simply underpayment, but in fact no payment for work performed. The employees had limited experience in, and knowledge of, the Australian workplace relations regime. They had not worked as independent contractors.”

Eventually, the organisation accepted the workers were indeed employees.

“The judge in this case has found that these workers were highly vulnerable and were employees who should have been paid their minimum entitlements for each hour worked,” Natalie James, the Fair Work Ombudsman, said. 

“Contracting arrangements can be appropriate, but not as a mechanism to reduce payments to workers who are performing specified duties at specified times under direction from an employer,” she said.

 

Key HR takeaways

The case serves as a reminder that ensuring compliance to fair remuneration packages, as well as appropriately defining workers as contractors or not, is important for all organisations. The Fair Work Ombudsman has outlined the key elements that separate employees from contractors:

Employees:

  • Carry out ongoing work which is dictated and controlled by the employer.
  • Hours are controlled by the employer.
  • Not responsible for financial risk.
  • Entitled to superannuation and minimum wages.
  • Have income tax taken out of their pay.
  • Paid regularly.
  • Generally entitled to paid leave if permanent.
     

Contractors:

  • Dictate how they accomplish their work and with what skills.
  • Decide whether to employ another to carry out the work.
  • Carry financial risks.
  • Pay their own superannuation and tax.
  • Have their own insurance.
  • Contracted to do work for a set time or a set task.
  • Decide their own hours.
  • Invoice for their work, or are paid at the end of a project.
  • Do not get paid leave.

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