Court action: Sydney manufacturer accused of paying overseas workers just $8 an hour

A plastics manufacturer in Sydney is being taken to court by the Fair Work Ombudsman over allegations it underpaid two workers by paying a flat rate of $8 an hour and failing to pay penalty rates over a multi-year period.

Delahill Pty Ltd, which trades as ABCO Plastics in Guildford, as well as its director, Guilherme Roque Rebello, will face Federal Court over allegations it breached workplace law by failed to comply with the Ombudsman’s requests to pay the couple back more than $86,000 in wages.

According to the Ombudsman, the business underpaid a Sri Lankan couple in their 50s who were in Australia on bridging visas and spoke limited English at the time of their employment.

The Ombudsman claims the underpayments resulted from the employees allegedly being paid flat hourly rates of $8 an hour for a probation period.

While the couple’s hourly rate later rose to $13 or $14 an hour, under the relevant award the couple is entitled to rates of more than $17 an hour and $32 an hour for overtime.

The couple tipped off the FWO to the underpayments, which led to the company and director Rebello being issued compliance notices to back pay the amounts.

Fair Work Ombudsman Natalie James said the agency made extensive efforts to resolve the matter before launching legal action.

“We prefer to assist employers to rectify inadvertent non-compliance issues but we are prepared to take legal action against employers which refuse to co-operate,” James said.

The Ombudsman is seeking a court order for Delahill to back pay the employees in full, while the company also faces a maximum penalty of $25,000.

Rebello faces a maximum penalty of $5100.

Will Snow, senior associate at Finlaysons, told SmartCompany the case is another example of the Fair Work Ombudsman doing its job.

“It really highlights the excellent and important work the Ombudsman undertakes,” Snow says.

“This couple appear really vulnerable, on tenuous visa arrangements, with limited English and possibly limited understanding of what their rights are.”

Snow says the $8 an hour flat rate represents a “massive underpayment”.

“It is a significant reduced rate,” he says.

“Also you have the employer failing to apply correct penalty rates for overtime.”

Snow says it never pays to ignore compliance notices from the Ombudsman.

“I don’t know why it (the business) wouldn’t have complied with the compliance notice,” he says.

“Ignoring notices does not make the issue go away.”

Snow says it is possible, especially in light of the investigations into underpayment claims at 7-Eleven, that the employees in this case may have even worked more hours than is reflected on their timesheets.

He says the onus is on employers to examine what it paid employees.

“You can get into the situation where an ombudsman can look back and go through this,” he says.

 “Businesses need to examine current payroll and assess if compliance with the applicable award.”

“If they’re not, there could be a large and ever-growing shortfall.”

SmartCompany contacted Delahill’s director Guilherme Roque Rebello but did not receive a response prior to publication.