Massage parlour operator penalised for refusing to back-pay two workers

The Fair Work Ombudsman has secured more than $100,000 in penalties against the former operators of two massage parlours in Brisbane after they refused to back-pay two workers who had been underpaid less than $13,000.

Bishnu Laxmi Ganesha Trading Pty Ltd, which formerly operated the Brisbane City Thai Massage and Day Spa and Heavenly Asian Massage parlours, has been penalised $97,000 in the Federal Circuit Court. In addition, the former company owners Sean Pinnell and Sajana Paudel have been penalised $4625 and $10,600 respectively.

Judge Salvatore Vasta imposed the penalties after Pinnell, Paudel and their company admitted contravening workplace laws by failing to comply with a Compliance Notice issued by the Fair Work Ombudsman requiring them to back-pay two massage therapists a total of $12,842 in outstanding wages and entitlements. Vasta also ordered the company to back-pay the employees in full. They have been back-paid less than half their entitlements to date.

Bishnu Laxmi Ganesha Trading business manager Binaya Sapkota has also been penalised $8000 for his involvement in contraventions of record-keeping and pay slip laws and in the failure to provide the employees with a Fair Work Information Statement at the commencement of their employment.

The employees in question were Japanese women aged in their mid-20s who were in Australia on 417 working holiday visas. Inspectors found that the employees had been underpaid over a three-month period in 2016. The employees had been paid on a per-massage basis for most of their employment, but were entitled to the minimum hourly rates and entitlements under the Hair and Beauty Industry Award.

An inspector issued a Compliance Notice requiring Bishnu Laxmi Ganesha Trading to back-pay the workers, but the company, Pinnell and Paudel failed to comply with the Notice. Under the Fair Work Act, business operators must adhere to Compliance Notices, unless they have a reasonable excuse, or make a Court application for a review if they are seeking to challenge a Notice.

Vasta found that Pinnell had responded to receiving the Compliance Notice by sending the Fair Work Ombudsman an email saying that he would “be seeking some legal advice about these ‘ridiculous charges’,” before later claiming he had no money to pay the Compliance Notice. Vasta also took issue with a submission from Pinnell’s solicitor that failing to comply with the Compliance Notice was not a serious breach.

“What has to be said about that is two things; firstly, the money is not insignificant,” Vasta said. “If it were so insignificant then there should have been no trouble at all for the company and for the directors to have been able to pay that money when it was asked for.”

The two employees were paid only 39 and 41 per cent, respectively, of what they were entitled to. Vasta noted this meant the company “was saving itself, on average, 60 per cent of what it should have been paying to what it did actually pay”.

Vasta also said. “That amount of money, for which they were underpaid, would be extremely sizable to those particular employees. Therefore, I cannot agree with any submission that attempts to minimise the conduct of the company.”

Fair Work Ombudsman Natalie James says the penalties imposed send a message that there will be serious ramifications for employers that thumb their nose at the law by refusing to back-pay workers who have been short-changed.

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