Security company penalised for underpayments

A security contractor based in Coffs Harbour has been penalised by the Federal Circuit Court a total of $68,560 for underpaying 14 employees.

Northcoast Security Services Group Pty Ltd (Northcoast Security), which has since been liquidated, along with its two directors Kuldeep Chouhan and Ricky John Nelson, were investigated by the Fair Work Ombudsman for alleged violation of the Fair Work Act in which they underpaid the employees of almost $94,000.

Chouhan and Nelson were fined $32,560 and $36,000 respectively, for their involvement in the security company’s underpayment of its workers. The court also ordered that they pay compensation of $128,678 in respect of underpayments and interest owing, noting that they managed the operations of the security company and were thus responsible for the loss sustained by the workers.

The workers were paid flat rates as low as $18 an hour instead of the around $40 an hour they were entitled to under the Security Services Award 2010 for some weekend, night and overtime work. The company also underpaid broken shift allowances and made unauthorised deductions from employee wages to pay for uniforms and security equipment.

The Fair Work Ombudsman commenced proceedings against the security company in 2014. During the proceedings, Northcoast Security argued that the workers were actually employed by two labour hire entities. However, the Fair Work Ombudsman rejected this argument and the Court agreed that Northcoast Security did employ the workers and had contravened the Fair Work Act.

The employees were found to have been issued rosters by Chouhan, wore shirts bearing the logo of Northcoast Security, and completed timesheets bearing the company’s name.

Fair Work Ombudsman Sandra Parker said the penalties and compensation imposed by the Court reflected the deliberate nature of the contraventions.

“Labour hire is a legitimate way to source staff, as long as they are paid correctly,” Parker said. “Unfortunately, some employers seek to use this arrangement unlawfully, to ignore award entitlements and get a competitive advantage over businesses that operate according to the law.

“This judgment should serve as a warning to employers that they will get caught and face significant consequences for their actions, such as orders for significant compensation.”

In setting the penalties, Judge Manousaridis said that the penalty should “signal to employers, and to persons involved in the management of companies that employ persons, that there will be a significant penalty to pay if they do not comply, or take steps necessary to ensure they comply” with the Fair Work Act.

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