$130,000 penalties for nail salon after “elaborate sham” to hide exploitation

The Fair Work Ombudsman has secured a total of $130,000 in penalties against the operators of an Adelaide nail salon for exploiting two young, migrant workers and creating false records as part of an “elaborate sham” to try to cover it up.

Adelaide man Minh Gia Le, who previously operated a nail salon in the Colonnades Shopping Centre at Noarlunga Centre, has been penalised $30,000 and his company House of Polish Central Pty Ltd, which currently operates the salon, has been penalised a further $100,000, in the Federal Circuit Court.

The penalties are the result of legal action by the Fair Work Ombudsman.

The nail salon has at various times traded as Global Nail and Beauty and/or House of Polish Central.

Le and his company admitted underpaying two nail technicians at the salon a total of $53,021 between November 2014 and March 2016.

The employees, aged as young as 20 and 21 at the time, were both Filipino migrants.

Fair Work inspectors investigated after one of the employees lodged a request for assistance.

Inspectors found that the employees were paid as little as $12 an hour, despite being entitled to $18.97 to $19.44 for normal hours and penalty rates ranging from $23.71 to $38.88 for weekend work under the Hair and Beauty Industry Award 2010 at the time.

The employees were underpaid $35,680 and $17,339 respectively. They were back-paid in full in late 2016.

Judge Stewart Brown rejected Le’s claim that he had incorrectly believed that the employees could be paid as apprentices.

Judge Brown said Le must have been aware of his responsibilities as the Fair Work Ombudsman had drawn his attention to his obligations under the Award.

The Fair Work Ombudsman issued Le a Letter of Caution in 2015 after a proactive audit of his salon found that an employee had allegedly been underpaid more than $2800.

“[I]n my view, this offending was not inadvertent, particularly given the previous involvement of the FWO with the business,” Judge Brown said.

“As such, in my view, I am required to give significant credence to the FWO’s submission that both Mr Le and the company elected to take ‘a risk and place their own financial interests ahead of compliance with the law’.”

Judge Brown said the underpayment was a “very significant sum” which represented between 30 and 45 per cent of the entitlements of the two workers, who were vulnerable as they came from a non-English speaking background.

Le and his company also breached workplace laws by knowingly providing inspectors with false and misleading records during their investigation. Le also breached pay slip laws.

Le claimed in Court that his business had lost some records following a “cyber-attack” and that he had recreated records in an effort to assist the Fair Work Ombudsman and provide a response to Notice to Produce issued by inspectors.

However, Judge Brown found that the false records Le created in response to the Notices were “an elaborate sham” which “grossly favoured him” by significantly understating the hours the employees had worked, creating an appearance that they had been paid much higher rates than was actually the case.

“I have reached the conclusion that the reconstruction was deliberately and deceitfully motivated,” Judge Brown said.

“Mr Le’s intent was, more likely than not to deceive [the Fair Work inspector] on the basis that he considered it highly improbable that he could be found out.”

Time records kept by the employees were important in establishing the underpayments, Judge Brown said.

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