13 April 2023

The Fair Work Ombudsman has secured more than $291,000 in penalties and back-payment orders in court against the former operators of a Sydney hairdressing salon after they underpaid a South Korean worker through an unlawful cashback scheme.

The Federal Circuit and Family Court has imposed a $100,000 penalty against Yeon Beauty Salon Pty Ltd, which operated the ‘Yeon Art Hair’ salon in Eastwood, and a $39,091.50 penalty against the company’s sole director and manager, Mi Yeon Ha.

The penalties were imposed in response to Yeon Beauty Salon Pty Ltd and Ms Ha underpaying the employee’s minimum entitlements and requiring her to make unlawful cashback payments.

In addition to the penalties, the company and Ms Ha have both been ordered to pay the worker a total $103,036.25 (plus interest), and the company an additional $49,577.17 compensation (plus interest) to rectify the underpayments and cashback payments.

The breaches occurred between 2015 and 2019 when the worker, a South Korean national, was sponsored by the company on a subclass 457 skilled work visa to work as a hairdresser.

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

Inspectors found that the worker had been underpaid more than $49,000 due to underpayment of her minimum wages, a tool allowance, overtime pay and penalty rates for weekend and public holiday work under the Hair and Beauty Industry Award 2010 and the Fair Work Act’s National Employment Standards.

The worker had also been unlawfully required to repay a total of $105,609 of her wages and entitlements to Ms Ha.

The worker was told this was to cover leave entitlements and “amounts associated with her visa”, including training fees, accountants’ fees, tax and superannuation.

Yeon Beauty Salon also breached workplace laws by failing to make and keep records, on occasion issued the worker with false and misleading payslips, and regularly failed to issue any payslip at all.

The worker gave evidence that she at first did not ask questions about the cashback payments because she did not want to harm her working opportunities in Australia.

The worker said that when she later asked Ms Ha to provide her with payslips, Ms Ha replied words to the effect of “I am doing so much for you, as your working visa sponsor, you will get permanent residency, if you are asking me all these questions and being difficult, it’s not good.”

Judge Robert Cameron said he was not persuaded that Ms Ha felt any remorse in relation to her treatment of the worker and found that there was a need to impose penalties to deter Ms Ha and other employers from similar conduct in future.

“I accept that it is important that penalties be set at a level such that they are not an acceptable cost of doing business, and so tend to discourage repetition or emulation of the contraventions,” Judge Cameron said.

The Fair Work Ombudsman has filed 126 litigations involving visa holder workers, and secured more than $13.4 million in court-ordered penalties, in the past five full financial years.

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.

Small businesses can find targeted resources at the Small Business Showcase and information is available for employees and employers at our visa holders webpage.

The Fair Work Ombudsman has an agreement with the Department of Home Affairs, called the Assurance Protocol, where visa holders with work rights can ask for help without fear of their visa being cancelled. Details are at our visa protections webpage.