The Court gets tough on directors who underpay staff

By Margaret Miller • In Employment LawComments Off on The Court gets tough on directors who underpay staff

Judge Jarrett of the Federal Circuit Court has imposed record penalties and a precedent-setting court order for a businessman to personally back-pay employees following the “calculated and deliberate” underpayment of Gold Coast security guards. The penalties, totalling $308,400, were the highest gained by the Queensland Fair Work Ombudsman.

Owen Ivor Jennings was fined $51,400 and his company Step Ahead Security Services Pty Ltd, was fined $257,000. The Fair Work Ombudsman sought an order for Jennings to be personally liable for the unpaid employee entitlements after a back-pay order against Step Ahead Security Services could not be enforced because the company had been wound up.

Judge Jarrett found that Jennings had ignored warnings from the Fair Work Ombudsman to pay his employees correctly, and instead paid flat rates which undercut the terms and conditions of the Security Services Industry Award.

Judge Jarrett said that Jennings was “the sole director of two previous companies offering security services that were each wound up, the second one in circumstances where there were complaints of outstanding remuneration owed to employed security guards that were not pursued following the employer’s deregistration.”

Judge Jarrett further said that Jennings was now operating a fourth security company out of the same premises previously occupied by Step Ahead Security Services. Jennings is now a consultant to a new company, Tweed Coast Security Pty Ltd.

Judge Jarrett ordered that 25 per cent of Jennings’ penalty be suspended, to be activated if he is involved in underpaying employees again within the next five years and also imposed an injunction restraining Jennings from underpaying security industry workers in future. If he is found by the Court to breach the injunction, Jennings could face contempt of court proceedings.

Where individual business owners and directors are directly responsible for underpaying employees, the Fair Work Ombudsman will now seek court orders against them personally if the company is unable to pay.

For more information, or for any other Employment Law related queries, please contact Margaret Miller, Partner in our Litigation & Dispute Resolution department.

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