The Fair Work Ombudsman (FWO) has won its first underpayment prosecution in the Federal Circuit Court which relied on racial discrimination provisions under the Fair Work Act 2009 (Cth) against a hotelier who underpaid two staff members based on their ethnic origin.
Since 2009, the FWO has had jurisdiction to investigate discrimination against employees on the grounds of pregnancy, race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or career responsibilities, religion, political opinion, national extraction or social origin.
Mr Loh was brought to Australia by the hotel owner in 2007 under a 457 visa to work as a head chef on a full-time basis. His wife joined him under a spousal visa in 2009 working as a kitchen hand on a casual basis until she resigned in 2010. In 2013, the couple gained permanent residency in Australia and after a dispute over annual leave, Mr Loh resigned.
As Mr Loh resigned without notice, Mr Chang claimed that he owed him money which prompted Mr Loh to contact the FWO who investigated the hotel’s employment practices. The FWO also conducted an audit into the amounts paid to 15 other employees for a certain period of time who were Australian nationals of Caucasian descent.
As a result of the proceedings which were commenced by the FWO in 2015, Mr Chang who owned and operated the Scamander Beach Resort Hotel in Tasmania until 2014, was penalised $35,099 in the Federal Circuit Court of Australia and his company Yenida Pty Ltd was also penalised $176,005 for their conduct.
The FWO, amongst other things, was able to convince the Federal Circuit Court that Mr Chang and his company breached the racial discrimination provisions of the Fair Work Act by treating a husband and wife of Malaysian descent differently to Australian staff that were employed by his company, and underpaying them by over $28,000.
Despite Mr Chang’s denial which was not accepted by Judge Barbara Baker, the evidence before the Court showed that their national extraction and Chinese race was a ‘substantial and operative reason’ that Mr Chang and his company had discriminated against them by requiring them to work longer hours and for significantly less pay or no pay.
Mr Chang also failed to keep records of the work hours of the employees.
In a media statement issued by the FWO yesterday, it was reported that Ms James of the FWO, said:
“This employer knew that all staff were lawfully entitled to minimum Award pay rates but chose to pay the Malaysian couple significantly less than Australian staff because of their race, which is unlawful and completely unacceptable”
“It is an uncomfortable truth that racial discrimination is a driver behind some of the exploitation of migrant workers in this country.”
“The Court’s ruling in this matter sends a message that singling out migrant workers for exploitation is serious unlawful conduct and significant penalties apply.”
As a result of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 which came into effect in September 2017, there are now significantly higher penalties for a wide range of contraventions including record-keeping breaches.
Further, employers who do not meet record-keeping or pay-slip obligations and cant give a reasonable excuse will need to disprove allegations of underpayments in Court, which effectively reverses the onus of proof on the employer.
The decision has sent a clear message that the FWO can and will pursue penalties for discrimination against employers tempted to make employment decisions based on race.
Author: Cristian Fuenzalida