Retailer cautioned but scarcely fined for more than $180,000 in underpayments

A Brisbane retailer has been cautioned after underpaying four Chinese employees $183,000.

The Sunnybank business has been fined $550 and issued with a letter of caution, with Fair Work indicating the incident will be a key factor in deciding whether further action is taken should the business come to the attention of the Ombudsman in the future.

In a statement, Fair Work Ombudsman Natalie James said the retailer had avoided court proceedings because it did not have a history of non-compliance.

“When we find employers who have made mistakes, our preference is always to educate them about their obligations and work with the business to resolve the issues without using formal enforcement mechanisms,” she said.

“This is an example of our fair, reasonable and proportionate response to employers who admit their mistakes, fix them immediately and put systems in place to ensure the errors are not repeated in future.”

The retailer underpaid four staff amounts ranging from $12,000 to $80,000. The underpayments were due to the employees being paid a flat rate of $12 an hour between 2011 and 2013.

The business immediately back-paid the employees in question after Fair Work inspectors notified them of the underpayments.

“It is vitally important that employers take the time to ensure they are aware of the minimum pay rates applicable to their staff,” James said. “A small mistake left over time can easily result in a hefty bill for back-payment of wages – so it is important employers get it right in the first place.”

Swaab Attorneys partner and workplace relations expert Warwick Ryan previously told SmartCompany that businesses underpaying workers arises for a variety of reasons.

“In smaller businesses, it sometimes arises because the employers simply don’t have any understanding of their obligations to meet awards,” he told SmartCompany. “For foreign workers, there is that element of just having a job. They’re not going to ask too many questions.”

Ryan says underpayment of workers is a major problem because sometimes an employer is uncertain which award their staff should be covered by.

“I think the key is to simplify the awards system. It’s far too complex.”

Between July 2013 and February 2014, Fair Work inspectors issued 48 letters of caution to employers who were found to have breached workplace laws. Litigation is only used for the most serious cases.