The True Cost of Underpaying Foreign Workers: A Case Study from the Australian Hairdressing Industry
As an immigration specialists practice, Sellanes Clark, is always proactive in advising Australian business sponsors about the risks of not paying their foreign workers. A recent media release from the Fair Work Ombudsman highlights the serious consequences that can result from underpaying workers and engaging in unlawful cashback schemes.
In the case described in the media release, a Sydney hairdressing salon underpaid a South Korean worker by more than $49,000 by failing to pay minimum wages, a tool allowance, overtime pay, and penalty rates for weekend and public holiday work. The worker was also required to make unlawful cashback payments totaling $105,609. As a result, the company and its sole director and manager have been ordered to pay a total of $291,704.92 in penalties and back-payments.
The penalties imposed by the Federal Circuit and Family Court include a $100,000 penalty against the company and a $39,091.50 penalty against the company’s sole director and manager. In addition, the company and sole director have been ordered to pay the worker a total of $103,036.25 (plus interest) and the company an additional $49,577.17 compensation (plus interest) to rectify the underpayments and cashback payments.
It is essential for Australian business sponsors to understand the serious consequences of underpaying foreign workers. In addition to facing penalties and back-payment orders, companies that engage in these practices risk damaging their reputation and losing the trust of their customers and employees. Furthermore, underpayment of workers is a breach of workplace laws and can result in further legal action being taken against the company.
Australian business sponsors should take proactive steps to ensure they are meeting their obligations to their foreign workers. This includes regularly reviewing their employment practices and policies, providing accurate and timely pay slips, and maintaining accurate employment records. Seeking legal advice from an experienced immigration lawyer can also help companies ensure they are complying with their obligations and avoiding costly legal action.
In conclusion, the recent media release from the Fair Work Ombudsman serves as a timely reminder of the risks of underpaying foreign workers and engaging in unlawful cashback schemes. Australian business sponsors must take their obligations to their employees seriously and take proactive steps to ensure compliance with workplace laws. Failure to do so can result in significant financial and reputational damage to the company.
If you are an Australian business sponsor employing foreign workers, it is important to ensure that you are meeting your legal obligations and providing fair and lawful working conditions. This includes paying your workers their minimum entitlements and avoiding engaging in cashback schemes or other unlawful employment practices.
IMPORTANT NOTE: While the media release cited in this article pertains to a hairdressing salon, it is important to note that the risks associated with underpaying foreign workers and engaging in unlawful employment practices are not limited to any particular industry. Employers in all industries must comply with Australian workplace laws, including minimum wage and entitlements, and must avoid engaging in cashback schemes or other unlawful practices. Failure to do so can result in serious legal and financial consequences for the employer, regardless of the industry in which they operate. It is essential for employers to take proactive steps to ensure compliance with workplace laws and protect the rights of their foreign workers.
If you are unsure about your obligations as an employer, or if you are facing legal action from an employee or government agency, seeking the advice of an experienced immigration lawyer can help you navigate the complexities of Australian workplace laws and protect your business.
At Sellanes Clark, our team of experienced lawyers and immigration specialists can provide you with the guidance and support you need to ensure compliance with workplace laws and protect your business interests. Contact us today to schedule a consultation and learn more about how we can help you.