Fair Work Ombudsman on the lookout for underpayment of employees with $300,000 prosecution and $62,000 fine

The Fair Work Ombudsman is cracking down on underpayment of staff with its latest prosecution of a Melbourne food wholesaler, who allegedly underpaid employees more than $300,000, coming hot on the heels of a fine of $62,000 plus back pay of $133,000 against a cleaning company.

The FWO is prosecuting the operator of a Melbourne food wholesaler for allegedly underpaying 46 employees, including many foreign workers, the sum of $316,795.

Quality Food World, which operates a food wholesaling business from a warehouse based at Mordialloc, and the company’s production manager, Atar Schwartz, will face court.

FWO alleges Quality Food World’s employees were underpaid minimum hourly rates, casual loadings, public holiday pay, overtime rates and annual leave entitlements between 2007 and 2011.

The biggest alleged underpayment of an individual employee is $22,358 and the underpayments were discovered when Fair Work inspectors audited Quality Food World in 2011.

Fair Work Ombudsman Nicholas Wilson says a decision to prosecute was made because of the significant amount involved for many vulnerable workers.

Quality Food World and Schwartz face maximum penalties per breach of up to $33,000 and $6,600 respectively at the case, which starts on November 5 in the Federal Magistrates Court in Melbourne.

The latest prosecution follows the recent Federal Magistrates Court judgment in Sydney where a national cleaning company was fined $62,000 for underpaying 31 cleaners, a number of them foreign workers.

The court imposed the fine yesterday against the Glad Group, after the company admitted underpaying the employees a total of $133,845 between October, 2008 and August, 2009.

Glad Group holds cleaning contracts for more than 125 office buildings around the country, but all of the underpaid employees worked as cleaners at 126 Phillip Street, Sydney.

The employees included international students, working holiday visa workers and recent immigrants and many of them spoke little English. Six were aged under 21 at the time.

Federal Magistrate Emmett found Glad Group had displayed a disregard for its obligations under workplace laws, resulting in employees suffering significant loss.

The underpaid cleaners generally worked four-hour shifts at night and the underpayments were the result of Glad Group claiming to outsource employment of the cleaners for the fourth hour of their shifts to another company – LJ & LJ King – which paid them only $13 to $15 an hour, when they were entitled to more than $17 an hour.

However, because Glad Group continued to control and direct the employees for their whole shift, the court found it was the true employer and was responsible for paying the cleaners for all work performed.

One employee – a recent immigrant from Asia who was aged 23 at the time – was underpaid more than $20,000.

Glad Group has since rectified the underpayments of all employees it has been able to locate. A small number cannot be found.

SmartCompany contacted Quality Food World and the Glad Group but both declined to comment.