The Fair Work Ombudsman has secured a total of $177,000 in court penalties against a Sydney accounting and financial services company and its owner-operator after they required a migrant worker to pay them amounts that covered her whole wage as part of an unlawful cashback scheme.
The Federal Circuit and Family Court has imposed a $148,000 penalty against Innovative Associates Pty Ltd and a further $29,000 penalty against the company’s sole director and owner, Dila Ram Kharel.
The penalties were imposed after Mr Kharel admitted he was involved in Innovative Associates breaching workplace laws in its treatment of the worker the company employed on a part-time basis as an assistant accountant between July 2019 and December 2020.
The worker, a Nepalese national, was on a temporary graduate visa at the time and aged in her 30s.
Innovative Associates unlawfully failed to pay the worker any wages for the first approximately 10 weeks of her employment, before unlawfully requiring the worker to pay amounts to Mr Kharel or Innovative Associates sufficient to cover not only her wages, but also superannuation contributions and tax.
The worker was required to transfer amounts into bank accounts in Mr Kharel’s name or which Mr Kharel controlled or had access to. Mr Kharel would then transfer the money into Innovative Associates’ bank account and it would then use the funds to pay the worker’s wages, and satisfy PAYG withholding and superannuation obligations in respect of the worker.
From October 2019 until December 2020, Innovative Associates required the worker to pay a total of $32,907 into Mr Kharel’s bank accounts and Innovative Associates returned $27,873.50 to the worker in the form of wages as part of the exploitative cashback scheme.
The worker was lawfully entitled to be paid according to Australia’s National Minimum Wage Order but the cashback scheme resulted in her being left with no wages at all for the work she performed.
Innovative Associates also breached record-keeping and pay slip laws, including by knowingly providing a Fair Work Inspector with false or misleading pay slips.
The company also failed to pay the worker for public holidays where she was entitled to be absent from work, and failed to pay her accrued but untaken annual leave entitlement at the end of her employment.
In total, including all contraventions related to the cashback scheme and underpayment of wages and other entitlements, Innovative Associates underpaid the worker a total of $40,164.49. The company has back-paid the worker in full.
Mr Kharel was involved in all of Innovative Associates’ contraventions.
Fair Work Ombudsman Anna Booth said the case makes clear that exploiting workers through unlawful cashback schemes is serious conduct that will not be tolerated.
“This company implemented a cashback scheme to try to give the impression that it was complying with its legal wage obligations, when in fact it was deliberately exploiting a vulnerable migrant worker for its own gain,” Ms Booth said.
“Unlawful cashback schemes are one of the most blatant and appalling forms of exploitation and we are committed to holding the perpetrators of such schemes to account.
“Employers need to be aware that taking action to protect potentially vulnerable workers, including visa holders, is among the Fair Work Ombudsman’s top priorities.
“All employees in Australia are entitled to receive – and keep – the minimum lawful entitlements that apply to their employment position, regardless of their visa status. Protections exist for any visas of those who call out exploitation.
“We also have no tolerance for allegedly knowingly providing our inspectors false or misleading records.
“We urge visa holders and other employees with concerns about pay or entitlements to do as the worker did in this case and contact the Fair Work Ombudsman for free advice and assistance. They can also contact their union if they are a member.”
Judge Gillian Eldershaw found that the contraventions were deliberate.
Judge Eldershaw noted Innovative Associates and Mr Kharel had provided false and misleading information to a Fair Work Inspector and that it was two years after FWO commenced its investigation before they began rectifying the contraventions.
“[The worker] was working for minimum wage and, I infer, could ill-afford to be held out of being paid her lawful entitlements for any period, let alone the time that elapsed,” Judge Eldershaw said.
Her Honour found there was a clear need for penalties to deter Innovative Associates and Mr Kharel from future breaches given their “disregard for their obligations” and to deter other employers from similar conduct.
“It is important that the penalty sends a strong signal to the community that [Innovative Associates’ and Mr Kharel’s] conduct is an unacceptable way to operate a business,” Judge Eldershaw said.
The Fair Work Ombudsman investigated after the worker lodged a request for assistance.
