FWO fines massage shop for underpaying students, backpackers

FWO fines a massage shop for underpayment of workers were employees who should have been paid minimum wages and entitlements applicable under the Hair and Beauty Award 2010.

The Fair Work Ombudsman has sounded a follow-up warning to the operators of massage shops that flouting minimum pay rates and short-changing vulnerable overseas workers will not be tolerated.

The latest note of caution follows another case in Melbourne where Fair Work inspectors have uncovered the underpayment of vulnerable Chinese workers at a massage shop in the CBD.

The Agency has announced enforcement action against Sen’s Body & Mind in the Melbourne Central Shopping Centre for misclassifying employees as independent contractors and short-changing them thousands of dollars.

When Fair Work inspectors audited the business just before Christmas last year, it found 10 of the 11 workers were international students or backpackers on the 417 working holiday visa.

Initially, Fair Work inspectors issued Sen’s Body & Mind with an on-the-spot fine for its failure to keep appropriate records and issue pay-slips as required, but the employer challenged the fine, maintaining that the workers were independent contractors – not employees. As a result, an investigation was undertaken, which re-affirmed that the workers were employees and should have been paid minimum wages and entitlements applicable under the Hair and Beauty Award 2010.

Inspectors found that six staff had been underpaid a total of $5152 between 21 December 2015 and 10 January 2016. The largest underpayment of an individual worker was $1036.

Sen’s Body & Mind paid each of the workers 45% of the cost of each massage treatment they performed. However, as casual employees, they were entitled to be paid a minimum of $24.30 an hour for ordinary hours worked and up to $25.86 on Saturdays and $38.88 on Sundays.

For time worked after 9pm from Monday to Friday and after 6pm on Saturdays, the workers should have been paid $29.16 an hour and up to $48.60 on public holidays.

Fair Work Ombudsman Ms Natalie James says the employer, Yuns Healing Spirit Pty Ltd, has been required to enter into an Enforceable Undertaking aimed at encouraging behavioural change and future compliance with workplace laws. As part of the arrangement, it must repay the affected workers and apologise for its conduct, undertake workplace relations training and engage independent professional consultants to audit its future compliance.

Enforceable Undertakings were introduced by legislation in 2009 and the Fair Work Ombudsman has been using them to achieve strong outcomes against companies that breach workplace laws without the need for civil court proceedings.

“We use Enforceable Undertakings where we have formed a view that a breach of the law has occurred, but where the employer has acknowledged this and accepted responsibility and agreed to co-operate and fix the problem,” James says.

In March, the Federal Circuit Court imposed penalties of more than $118,000 against the operators of two Melbourne massage shops, which underpaid two of therapists more than $54,000.

James says the Fair Work Ombudsman has identified a common business model operating across many massage shops.

“Therapists are paid a percentage of the cost of the massage they perform, typically 50%, with no remuneration for time spent at the business where they have no clients,” she said.

“Anecdotally, we know that the therapists are often international students or overseas workers here on the 417 working holiday visa, particularly in Chinese and Thai massage shops.”

“We continue to receive requests for assistance from employees of massage shops, despite the fact we have sought to educate employers in this industry and taken a number of enforcement actions.”

James says she is focused on ensuring the Agency also does more to ensure culturally and linguistically diverse business operators understand and comply with Australian workplace laws. “Minimum wage rates apply to everyone in Australia – including visa-holders – and they are not negotiable,” she said.

Inside Small Business

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