Employment Law Update: Discrimination Action By The Fair Work Ombudsman


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The Fair Work Ombudsman has successfully pursued the former operator of a hotel in Tasmania for racial discrimination, which took the form of the deliberate underpayment of two migrant workers in the total amount of $20,550. In this article, Susan Moran, Principal of our dispute resolution team, considers recent action by the Fair Work Ombudsman which highlights the importance of employers complying with their record-keeping obligations.

In Fair Work Ombudsman v Yenida Pty Ltd & Anor [2018] FCCA 1342, the Federal Circuit Court found that the exploitation of the workers amounted to a breach of the racial discrimination provisions of the Fair Work Act 2009 (Cth) (the Act). In addition to under-payment and imposing additional working hours, the contravening conduct included record-keeping failures. Penalties were awarded against NSW man Mr Chang Yen Chang, as well as his company, Yenida Pty Ltd, exceeding $200,000 in total.

Record Keeping Obligations

The litigation is the first of its kind to be brought by the Ombudsman. As well as sending a strong message to employers that compliance with anti-discrimination legislation will be enforced, the decision serves as a reminder of the importance of compliance with payment and record-keeping obligations generally. Employers should invest time in ensuring their obligations are understood and implemented.

Some employers may not be aware of changes to laws relating to record-keeping which took effect from 15 September last year under the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth).  Whilst these changes arose from a focus on the need to protect vulnerable workers, employers should be aware these changes apply in respect of all of their employees.

Employers should take particular note of the “reverse onus of proof” created by new section 557C of the Act. If an employer fails, without a “reasonable excuse”, to comply with its obligations to keep records, make records available for inspection, or provide a pay slip, the employer will carry the burden of disproving any allegation against it in proceedings relating to contravention of certain civil remedy provisions – for example, an allegation of underpayment.

With the introduction of the concept of a “serious contravention” of a civil remedy provision, the exposure for employers is significant in this space.  A “serious contravention” occurs when an employer knowingly contravenes the relevant civil remedy provision, and the contravening conduct was part of a systemic pattern of conduct relating to one or more people. The maximum penalty for a “serious contravention” is $126,000 for individuals and $630,000 for corporations. These new penalties apply to serious contraventions of certain pay slip and record-keeping obligations.

In light of these amendments and an increased focus on enforcement, it is now more important than ever for employers to understand and comply with their record-keeping obligations. If you are uncertain about these requirements, or have received an under-payment complaint by an employee, be sure to seek legal advice.

This article is not legal advice.  It is intended to provide commentary and general information only.  Access to this article does not entitle you to rely on it as legal advice.  You should obtain formal legal advice specific to your own situation.  Please contact us if you require advice on matters covered by this article.