26 February 2016

A Federal Circuit Court judge has told a Melbourne businesswoman she could have avoided a $9000 penalty if she had co-operated with a Fair Work Ombudsman investigation into underpayment of wages.

Judge John O'Sullivan said co-operation from Deborah Ruth Souris was only forthcoming "at the door of the Court" after the Fair Work Ombudsman had initiated legal proceedings over her failure to act on three Compliance Notices.

Judge O'Sullivan described Ms Souris' refusal to comply with the Notices as "serious" and said that a penalty for both specific and general deterrence was required.

Ms Souris' company (now in liquidation) formerly owned and ran Kenny's Cardiology specialty card and giftware stores in Melbourne and Brisbane.

The Fair Work Ombudsman took legal action against Ms Souris after no action was taken in response to three Compliance Notices requesting back-pay for five former employees who had been underpaid a total of $11,187.

Under the Fair Work Act, business operators must comply with Compliance Notices issued by Fair Work inspectors or make a Court application for a review if they wish to challenge a Notice.

Handing down his decision on the matter, Judge O'Sullivan noted that Compliance Notices were an alternative means to litigation for the Fair Work Ombudsman to address non-compliance with federal workplace laws.

Judge O'Sullivan said it was "clearly the case" that Ms Souris and her former company TIS Logistics Pty Ltd, which went into liquidation soon after the Compliance Notices were issued, had "ample opportunity" to resolve the matter before it went to Court, but failed to do so.

He says failure to comply with Notices issued by Fair Work inspectors "undermines the effectiveness and objects" of the Fair Work Act and "is a challenge to the compliance powers" of the Fair Work Ombudsman.

While he noted that the underpayment of staff had since been rectified, "there was a measure of lack of contrition, corrective action and willingness to co-operate" on the part of Ms Souris.

Judge O'Sullivan said employers who received Compliance Notices from the Fair Work Ombudsman "should be left under no misapprehension about their obligations to comply (with them)."

"Sadly, had (Ms Souris) chosen to comply with the Notices before these proceedings were issued, she would have avoided the imposition of any penalty at all," he said.

Judge O'Sullivan declined separate requests from the Fair Work Ombudsman for an injunction restraining Ms Souris from underpaying employees in future and for an Order requiring her to undertake workplace training.

In a separate matter this month, Federal Circuit Court Judge Sylvia Emmett also imposed penalties of almost $25,000 against an employer and its director over a lack of co-operation with a Fair Work Ombudsman investigation.

In that case, the employer, Sydney-based Kleen Group Pty Ltd Pty Ltd and its director Henry Andrew Nickolls, failed to comply with a Notice to Produce (NTP) relevant employment documents.

As with Compliance Notices, business operators must comply with NTPs issued by Fair Work inspectors or make a Court application for a review if they are seeking to challenge a Notice.

In her decision, Judge Emmett says it is "imperative" that employers do their utmost to comply with Fair Work Ombudsman requests for documents.

"Notices to Produce are fundamental to the progress of any investigation of an allegation of contravention, or non-compliance, with the Act by the Fair Work Ombudsman," Judge Emmett said.

"Employees should be able to rely on their employers to keep proper records of employment as required by law. It is completely unacceptable for an employer to do otherwise."

Fair Work Ombudsman Natalie James says enforcing compliance with the range of enforcement tools at its disposal under the Fair Work Act is fundamental to maintaining the integrity of Australia's workplace laws and enabling inspectors to conduct thorough investigations.

"Building a culture of compliance with workplace law is important, and employers should be aware that we are prepared to take action where appropriate," she said. "The integrity of the system must be upheld."

Ms James says the two penalties issued by Judges Emmett and O'Sullivan show that employers cannot thwart the Fair Work Ombudsman by failing to respond to its requests without facing significant financial consequences and subsequent publicity about their behaviour.

She says Fair Work inspectors identifying issues in a workplace generally find that most employers are co-operative, engaging and willing to receive advice and assistance to rectify their mistakes and ensure future compliance.

"But we will take a dim view of those who give us the cold shoulder and refuse to work with us," she said.

Ms James encouraged employers who had any uncertainty about their workplace practices to visit the website at www.fairwork.gov.au or phone the Fair Work Infoline on 13 13 94. An interpreter service is available by calling 13 14 50 and information on the website is translated into 27 languages.

Small business can opt to be put through to a small business helpline, which has now assisted almost 300,000 callers since it was established.

Follow Fair Work Ombudsman Natalie James on Twitter @NatJamesFWO , the Fair Work Ombudsman @fairwork_gov_au or find us on Facebook www.facebook.com/fairwork.gov.au .

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Media inquiries:

Annie Lawson, Media Adviser
Mobile: 0466 522 004
annie.lawson@fwo.gov.au

Lara O'Toole, Media Adviser
Mobile: 0439 835 855
lara.otoole@fwo.gov.au