Vaping company penalised for “exploitive” and “deceitful” cashback arrangement

The Fair Work Ombudsman has secured a total of $37,485 in penalties in court against the husband-and-wife operators of a vaping products business in Sydney for exploiting a Chinese worker through an unlawful cashback arrangement.

The Federal Circuit and Family Court has imposed a $26,775 penalty against The Easy Vaping Company Pty Ltd, which trades as ‘Easy Vape Distribution’ and ‘Easy Vape Australia’.

In addition, the Court has imposed $5,355 penalties against both the company’s sole director Kate Dillon Chan and her husband Edward Chan, the company’s operations and finance manager.

The penalties were imposed after the Court found the company and Mr and Ms Chan had deliberately breached workplace laws.

The affected worker was sponsored by The Easy Vaping Company, on a 457 skilled work visa, to work as a marketing specialist between 2017 and 2020.

Fair Work Ombudsman Anna Booth said taking enforcement action to protect vulnerable visa holders remains a top priority for the agency.

“All employers need to be aware that the exploitative conduct, like the unlawful cashback requirement that we have seen in this matter, will not be tolerated in any Australian workplace,” Ms Booth said.

“All workers have the same rights in Australia regardless of nationality or visa status and anyone with concerns about their pay or entitlements should contact the FWO for free assistance.”

Fair Work Inspectors investigated after the worker lodged a request for assistance.

Inspectors found that The Easy Vaping Company pressured the worker to comply with an unlawful cashback arrangement by telling him the company would sponsor his 457 visa but was unable to afford to pay him the $65,000 minimum annual wage that applied to his position under Australian law.

The FWO alleged in Court that Ms Chan communicated the requirements of the cashback arrangement to the worker in private in the ‘pick and pack room’ of The Easy Vaping Company’s business premises.

After the worker received wages into his account, he was required to withdraw part of his wages from an ATM and pay the cash to Mr Chan, between July 2017 and March 2018.

The company back-paid the worker a total of $13,000 after being contacted by the FWO.

In her judgement, Judge Brana Obradovic found that the unlawful conduct was “deliberate” and “exploitive of a sponsored worker whose livelihood and stay in Australia was dependant on his immigration status”.

Judge Obradovic said the loss suffered by the worker was “far from insignificant” and described the cashback arrangement as part of a “calculated strategy to disguise the unlawful conduct”.

“The Cashback Arrangement, while maintaining the outward appearance of legality, was in fact deceitful and demonstrated a contemptuous disregard for workplace laws,” Judge Obradovic said.

Judge Obradovic said the seriousness of the conduct warranted “meaningful penalties” and that there was a need for both specific and general deterrence.

“Conduct involving cashback arrangements raises particularly strong general deterrence considerations as such conduct is deceptive and designed to give the impression of compliance with the law, but is in fact insidious in its non-compliance. Employers’ obligations to workers cannot be avoided or abrogated,” Judge Obradovic said.

The FWO filed 138 litigations involving visa holder workers, and secured $15 million in court-ordered penalties in visa holder litigations, in the six financial years to June 2023.

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