A plumbing business in Victoria has been penalised $100,000, and the business operator fined $21,5000, for underpaying a worker thousands of dollars after incorrectly classifying him as an apprentice.
In a case brought by the Fair Work Ombudsman and decided in December, the Federal Circuit Court found Pulis Plumbing Pty Ltd paid the worker as a second-year apprentice, despite not formally signing up the worker under apprenticeship payment conditions.
According to the judgment, the 20-year-old worker started his employment with the business in September 2014 under the impression he was a second-year apprentice. The court heard the worker was paid an apprentice rate of $12.18 per hour, when the applicable hourly wage under the business’ enterprise agreement was $37.08 for ordinary hours or up to $74.16 for overtime hours.
The worker regularly worked 10- to 12-hour days and accumulated 201 hours worth of overtime, for which he was paid $1,831.77 or $9.11 per hour on average, which was even less than his hourly rate of $12.18 per hour.
The business was found to have failed to pay the worker sufficient rates on multiple occasions because he should have been considered a labourer, not an apprentice. Judge Grant Riethmuller also said there was evidence the business owner had sought advice from the Fair Work hotline, which advised that ordinary labourer rates must be paid if an apprenticeship agreement has not been made.
The court heard that when the worker’s employment was terminated, the worker attempted to follow up about outstanding wages that were owed. The employer replied via text, saying “stop doing my head in”. When the worker pressed further, the Ombudsman said the employer replied by saying, “seriously, fuck off. When I’m ready”.
Ultimately, the business and its owner were fined for underpaying the worker $26,882.73 over the three-month employment period, including by not providing leave and termination entitlements and meal and travel allowances. The underpayments have since been rectified.
Judge Reithmuller described the case as one involving “an outrageous exploitation of a young person”.
“The conduct is worse than simply underpaying an employee who has had difficulty obtaining work elsewhere, as the respondents also held out the lure of an apprenticeship to this young man: a particularly significant career and life goal for a young person who is not academically inclined,” the Judge said.
“The amount of the underpayment, in comparison to the payments actually made, is significant.”
Trent Hancock, a senior associate at law firm McDonald Murholme, tells SmartCompany that improper record-keeping issues are not uncommon amongst SMEs, and business owners would do well to review their practices.
In this case, the business was fined $5000 for failing “to make and keep records”, which is paramount for SMEs in case they are questioned.
“I think its becoming increasingly common to be exposed by the Fair Work Ombudsman, it seems like they have ramped up litigation in this area,” Hancock says.
Hancock stresses the importance of correct documentation when organising an apprentice, saying the job position alone isn’t enough.
“Simply calling someone an ‘apprentice’ isn’t good enough, there needs to be a training contract registered with the relevant body,” he says.
SmartCompany contacted Pulis Plumbing but the company declined to comment.
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