The Fair Work Ombudsman has secured penalties totalling $68,560 against the former directors of a Coffs Harbour security contractor found to have underpaid 14 employees almost $94,000. The FWO also secured penalties totalling $8,505 against the operators of a Brisbane-based security and communications installation services business for failing to comply with a Compliance Notice.

Northcoast Security Services Group Pty Ltd underpaid workers

The Federal Circuit Court found that Northcoast Security Services Group Pty Ltd (Northcoast Security), which has since been liquidated, contravened the Fair Work Act, and fined former company directors Kuldeep Chouhan and Ricky John Nelson, $32,560 and $36,000 respectively, for their involvement in the company’s underpayment of its workers.

The Court also ordered that both pay compensation of $128,678 in respect of underpayments and interest owing, noting that that they managed the operations of Northcoast Security and were responsible for the loss sustained by the workers.

The workers were paid flat rates as low as $18 an hour, with the exception of public holidays, while under the Security Services Award 2010, were entitled to around $40 an hour for some weekend, night and overtime work.

The company also underpaid broken shift allowances and made unauthorised deductions from employee wages to pay for uniforms and security equipment.

The Fair Work Ombudsman had previously informed Mr Chouhan about the need to pay employees their full lawful entitlements and commenced proceedings in 2014 after security guards contacted the regulator for help.

During the proceedings, Northcoast Security argued that the workers were actually employed by two labour hire entities, however the Fair Work Ombudsman rejected this argument and the Court agreed that Northcoast Security did employ the workers and had contravened the Fair Work Act.

The employees were issued rosters by Mr Chouhan, wore shirts bearing the logo of Northcoast Security and completed timesheets headed with the company’s name.

Fair Work Ombudsman Sandra Parker said the penalties and compensation imposed by the Court reflected the deliberate nature of the contraventions.

“Labour hire is a legitimate way to source staff, as long as they are paid correctly. Unfortunately some employers seek to use this arrangement unlawfully, to ignore award entitlements and get a competitive advantage over businesses that operate according to the law,” Ms Parker said.

“This judgment should serve as a warning to employers that they will get caught and face significant consequences for their actions, such as orders for significant compensation.”

In setting the penalties, Judge Manousaridis said that the penalty should “signal to employers, and to persons involved in the management of companies that employ persons, that there will be a significant penalty to pay if they do not comply, or take steps necessary to ensure they comply” with the Fair Work Act.

Security and communications business penalised

The Federal Circuit Court penalised ASGBRIS Pty Ltd (ASGBRIS) $7,087.50, and its sole director Mr Stephen Ward $1,417.50 for his role in the workplace law breaches.

Fair Work Ombudsman Sandra Parker said the outcome reinforced the importance of Compliance Notices to help workers recover unpaid wages.

“Compliance Notices are an important tool we use to get unpaid wages back into workers’ pockets. Businesses are on notice that if they don’t comply with Compliance Notices, they can expect court action,” Ms Parker said.

“We encourage any worker with concerns about their pay and entitlements to contacts us for assistance.”

In April 2019, a Fair Work Inspector commenced an investigation into ASGBRIS after receiving a request for assistance from an employee who worked at the businesses from November 2018 to February 2019.

A Compliance Notice was issued after the inspector finalised the investigation and formed a belief ASGBRIS had underpaid the worker in contravention of the National Employment Standards and the Electrical, Electronic and Communications Contracting Award 2010.

Specifically, the inspector believed ASGBRIS had failed to pay the employee overtime, personal leave, accrued annual leave on termination, annual leave loading, and payment in lieu of notice of termination.

The Compliance Notice required ASGBRIS to calculate the wages and entitlements owed to the employee and back-pay her by 20 August 2019.  ASGBRIS did not comply with the Compliance Notice.

ASGBRIS and Mr Ward instead claimed the employee was only entitled to trainee wages, despite the fact she was never subject to a formal training contract and was not paid trainee wages during her employment.

The FWO subsequently took legal action seeking penalties, and enforcement of the Compliance Notice against ASGBRIS and Mr Ward.

After the FWO had commenced its litigation, ASGBRIS took the action required by the Compliance Notice, including calculating the wages owed to the employee and back-paying her $3610.24.

Employers and employees seeking assistance can visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94. An interpreter service is available on 13 14 50.