E-commerce

Online fulfilment company penalised for ‘obnoxious’ conduct against migrant workers

A Sydney-based company that provides warehousing and distribution services in Sydney for products sold on online platforms has been penalised a total of $558,190 by the Federal Court for ‘deliberate and systematic’ underpayments against its migrant employees.

The court has imposed a $550,000 penalty against Hong Kong-based Winit (AU) Trade Pty Ltd, and an additional $8,190 penalty against its sole director and general manager at the time of the contraventions, Song Cheng after it was determined that between 2014 and 2019, Winit underpaid nearly 400 employees – most from migrant backgrounds – a total of more than $3.6 million.

The Fair Work Ombudsman initiated the litigation against Winit, for which it focused on a sample of 30 migrant employees who were underpaid a total of $368,684 under the Services and Wholesale Award 2010 between July 2017 and June 2018.

Individual underpayments ranged from $446 to $28,202, with 19 of the employees being underpaid more than $10,000.

The underpaid employees were all working holiday visa holders, mostly from Taiwan and aged in their 20s, who performed various duties associated with sorting, loading and packing goods at Winit’s warehouse at Regents Park in western Sydney.

The Ombudsman also determined that three of the underpayment contraventions met the definition of ‘serious contraventions’ under the Protecting Vulnerable Workers laws because of the deliberate and systematic conduct.

The said law stated that the maximum penalties for serious contraventions are 10 times the penalties that would ordinarily apply.

Fair Work Ombudsman Anna Booth said the penalties imposed demonstrate that employers who exploit migrant workers in Australia will face serious consequences.

“Lawful minimum rates apply to all employees in Australia and they are not negotiable,” Booth said. “All workers in Australia have the same rights, regardless of nationality and visa status. We will continue to pursue serious contraventions in court so that companies like Winit that deliberately and systematically exploit their employees face significant penalties.”

The employees regularly worked up to 60 to 70 hours per week over six or seven days, but most were paid a flat hourly rate of $24.41 with no penalty or overtime entitlements that were owed under the Services and Wholesale Award 2010.

Winit also failed to comply with laws relating to payslips, providing new employees with a Fair Work Information Statement, and various other Award obligations, including shift allowances, meal allowances and frequency of pay.

The company was also found to have reduced at least two employees’ shifts after they refused Winit’s settlement offer, made shortly after FWO commenced its investigation, to pay only 25 per cent of their outstanding entitlements.

All 30 employees have been back-paid in full. Winit also back-paid the large majority of other employees underpaid between 2014 and 2019 after engaging an external auditor.

The court found that Cheng was involved in Winit’s contraventions concerning overtime rates, penalty rates and frequency of pay though it was determined that he was not involved in the serious contraventions.

Justice John Snaden described Winit’s underpayment contraventions as “troubling”, particularly the serious contraventions, which he described as “deliberate and systematic”.

“The court must exact a heavy toll: not merely to ensure that Winit is brought to account for its obnoxious conduct; but also to serve as a warning to other employers who might be minded to ignore their own important Award and statutory obligations in the way that Winit did,” Justice Snaden said.

In relation to the adverse action contraventions, Justice Snaden said it was “difficult to overstate how concerning was Winit’s response to the refusal of the two employees in question to sign its proposed compromise”.

“When alerted to its wrongdoing, Winit’s initial response was not to correct it or take steps to ensure that it wouldn’t be repeated: it was to negotiate a monetary compromise,” Justice Snaden said. “Worse, when two of its employees pushed back on that course, it took reprisal action against them in the form of reduced working hours over and above reductions imposed upon other employees.”

This story was originally published on Inside Small Business.