Employer found guilty of underpaying worker for over 20 years

Thursday, April 20, 2017, 4:07pm

A court has found an employer underpaid a worker by more than $230,000 because it "recklessly disguised the true legal nature" of a 20-year-plus employment relationship by classifying him as an independent contractor.

Judge Norah Hartnett ruled that Mobilia Manufacturing Pty Ltd, its predecessor company Austcraft Constructions Pty Ltd and its sole director misrepresented the working relationship and categorised it as an independent contracting arrangement in breach of s357(1) of the Fair Work Act.

She declared that he was a Mobilia and Austcraft employee.

The worker begun at Austcraft in 1994, but never entered into a written contractual arrangement with the business.

He said his arrangement was "one of word of mouth and trust", but that he considered himself an employee.

The worker said he never discussed his working arrangements in greater detail because he was "very naïve" and was "embarrassed" to ask about his pay and entitlements.

Judge Hartnett accepted there was "simply an absence of agreement or discussion" about the employment relationship other than that the worker would be paid hourly and could use the company car.

She said that Mobilia and Austcraft had the power to direct the worker to perform work of its choosing and controlled important aspects of his working arrangements and day-to-day activities.

"The [worker] was not free to use his own discretion for the most part and the manner in which he performed the work was clearly demonstrative of a contract of employment," the judge said.

Judge Hartnett rejected the employer's claims that the worker's refusal to use a finger identification system, installed in the workplace in 2011 to scan employees as they clock on and off, indicated that he was not an employee.

She said the employer's argument lacked credibility and accepted the worker was already submitting detailed timesheets about his attendance in the workplace.

The judge concluded the worker was an Austcraft employee from 1994 to 2015 and that his employment transferred to Mobilia in May 2015.

She found the companies also breached s90 of the Fair Work Act by failing to pay the worker his accrued annual leave payments after he left the company in 2015.

Judge Hartnett ruled further that Mobilia contravened clause 35.2 of the Manufacturing and Associated Industries and Occupations Award, along with s45 of the Act, when it failed to make superannuation contributions between February and May 2015.

She calculated that the worker suffered a financial loss of $231,326.95, because of the employer failing to pay him at the correct rate (a shortfall of more than $26,000) or to pay for annual leave (more than $102,000), public holidays (more than $51,000), long service leave (more than $22,000) and superannuation (more than $29,000).

Judge Hartnett found the worker had missed out on 425 days of annual leave and more than 18 weeks long service leave.

She has asked the parties to formulate orders to reflect her findings and has re-listed the matter to consider penalties.

Balemian v Mobilia Manufacturing Pty Ltd & Anor [2017] FCCA 743 (13 April 2017)

Source: Workplace Express ( Link)