23 December 2024

The Fair Work Ombudsman has secured a total of $5,146,100 in court penalties after a New South Wales and ACT retailer exploited four Chinese migrants and hindered or obstructed Fair Work Inspectors, despite having been put on notice to comply.

The Federal Court has imposed a $4,299,000 penalty against Blue Sky Kids Land Pty Ltd, which previously operated children’s clothing stores in Sydney, NSW’s Central Coast, Newcastle and Canberra.

In addition, the Court has imposed a $760,000 penalty against company director Guo Dong Gu, a $43,000 penalty against company director Fei Rong Yang, and a $44,100 penalty against Q Fay Trading Pty Ltd, a company previously operated by Mr Gu and Ms Yang which imported clothing to supply to the stores.

The total penalties are the third highest ever secured in court by the Fair Work Ombudsman, following only the $15.3 million penalties secured in the Sushi Bay case and $10.3 million in the Commonwealth Bank and CommSec case, both also this year.

In addition to the penalties, the Court has ordered Blue Sky Kids Land, Mr Gu and Ms Yang to make back-payments to the workers, plus superannuation and interest.

The penalties have been imposed for a range of contraventions of workplace laws, including a total of $131,920 in underpayments of the four Chinese women, who were paid as little as $10 an hour when they were employed in retail positions in ‘Blue Sky Kids Land’ stores between October 2015 and June 2018.

The four workers were then recent migrants aged in their 40s, and spoke limited English.

Workplace laws relating to hindering or obstructing Fair Work Inspectors, record-keeping and issuing pay slips were also breached – including through giving false records to inspectors.

The case is the second where the Fair Work Ombudsman has secured penalties in court for a breach of the provision under the Fair Work Act’s Protecting Vulnerable Workers law reforms of hindering or obstructing a Fair Work Inspector.

Blue Sky Kids Land Pty Ltd committed all breaches, except one of the breaches for giving false or misleading records to an inspector, which was by Q Fay Trading Pty Ltd. Mr Gu was involved in most of the two companies’ breaches. Ms Yang was involved in some of the Blue Sky Kids Land underpayment breaches and one of the hindering or obstructing breaches.

The Court found that several of the breaches committed by Blue Sky Kids Land Pty Ltd and Mr Gu (relating to minimum wages, record-keeping and pay slips) were ‘serious contraventions’ under the Protecting Vulnerable Workers law reforms because they were committed deliberately and systematically.

Serious contraventions attract a tenfold increase in available maximum penalties.

Fair Work Ombudsman Anna Booth said the blatant contraventions were made even more horrendous by the fact that Fair Work Inspectors had had interactions with Blue Sky Kids Land and its directors dating back to 2006 and had clearly put them on notice to correct non-compliance issues.

“These substantial penalties highlight that exploiting vulnerable migrant workers is particularly reprehensible conduct that will not be tolerated in Australia,” Ms Booth said.

“We treat cases involving underpayments and use of false or misleading records impacting migrant workers particularly seriously, because we are conscious that they can be vulnerable due to factors such as a lack of awareness of their entitlements or a reluctance to complain.

“Hindering or obstructing a Fair Work Inspector is also unacceptable.

“Employers need to be aware that taking action to protect vulnerable workers is an enduring priority for the Fair Work Ombudsman. Any workers with concerns should contact us.”

Fair Work Inspectors discovered the exploitation of the four migrant workers when it investigated a request for assistance from one of them.

Individual wages underpayments ranged from $14,744 to $45,140. The workers gave evidence of the impacts of the underpayments, with one stating that she and her husband struggled to pay their mortgage and had to defer starting a family.

The four workers were underpaid minimum wages, casual loading and penalty rates, and not paid superannuation. Two of the workers were underpaid overtime, and one of the workers was not paid in lieu of notice or annual leave at the end of their employment.

Inspectors were provided with false records and one employee was threatened with dismissal for speaking to an inspector, unless she agreed to be engaged as a contractor.

During the Fair Work Ombudsman’s investigation, Blue Sky Kids Land and Mr Gu hindered or obstructed inspectors by ordering a Canberra store be closed so the inspectors could not conduct a site visit.

In another instance, the company and Ms Yang obstructed an inspector by ordering the deletion of timesheets.

Justice Anna Katzmann found that the breaches were deliberate and serious.

“What is more, the contraventions occurred in circumstances in which the respondents either knew or were wilfully blind to their legal obligations,” Justice Katzmann said.

“In the case of Mr Gu and Fei Yang, there is a need for both specific and general deterrence having regard to the nature and gravity of the contraventions in which they were involved; the circumstances in which and the lengthy period of time over which they occurred; the absence of contrition or corrective action; the various ways in which they actively obstructed the investigation, their continuing involvement in the [Blue Sky Kids Land] business in managerial roles albeit as employees of other companies after this proceeding was commenced; and the real risk that they will continue to reoffend when in a position to do so,” Her Honour said.

Blue Sky Kids Land Pty Ltd and Q Fay Trading Pty Ltd are in liquidation.

The Fair Work Ombudsman presented evidence in court indicating that a number of Blue Sky Kids Land retail outlets in Sydney were now being operated by separate companies which employed Mr Gu and Ms Yang to perform similar managerial roles, and that these companies had been the subject of underpayment complaints from workers.

Justice Katzmann said: “This evidence suggests that, even while this proceeding was on foot, Mr Gu and Fei Yang were continuing to underpay staff.”

The Fair Work Ombudsman filed 146 litigations against employers involving visa holder workers, and secured nearly $23 million in penalties in cases that have included visa holder workers, in the seven financial years to June 2024.

Employers and employees can visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94 for free advice and assistance. An interpreter service is available on 13 14 50.

The FWO also has an online anonymous report tool, including options to report in languages other than English and information for migrant workers is available at our visa holders and migrants webpage. Migrant workers have the same rights as every other worker.

Employees can also seek information from their employer and their union if they are a union member.