Industrial manslaughter offence introduced in New South Wales
On 20 June 2024, the New South Wales Parliament passed legislation to include a new criminal offence of industrial manslaughter under work health and safety legislation.
Read more...The director and Chief Executive Officer of a group of four sushi restaurants (Sushi Bay Group) which operated in New South Wales, the Australian Capital Territory and the Northern Territory was recently ordered to pay $1.6 million for her involvement in contraventions of the Fair Work Act 2009 (Cth) (FW Act) by the Federal Court of Australia (the Court).
The director and the Sushi Bay Group had a long history with the Fair Work Ombudsman (FWO), including dating back to 2009 when a restaurant in Queensland was found to have contravened the Workplace Relations Act 1996 (Cth) by underpaying employees.
In 2015, the director was issued with a “letter of caution” after an audit conducted by the FWO in 2014 of the Queensland restaurant revealed that there had been underpayment of employees, including paying below award rates of pay and failing to pay penalty rates and annual leave loading.
In 2016, the FWO investigated and subsequently prosecuted a restaurant in the ACT for underpayments and non-compliance with record keeping obligations. The company and the director were ordered to pay $124,416.00 in penalties. In addition, the company was to complete workplace relations training and arrange for an audit be conducted.
Earlier this year, in Fair Work Ombudsman v Sushi Bay Pty Ltd (in liq) (No 2) [2024] FCA 76, the Court found that over the period from 29 February 2016 to 26 January 2020, Sushi Bay Group and the director breached the FW Act and the Fair Work Regulations 2009 (Cth) (FW Regulations) by:
- Underpaying employees less than the minimum rates under the Restaurant Award 2010 (the Award);
- Not paying annual leave or annual leave loading;
- Requiring employees to repay or refund money;
- Making and keeping records which were false or misleading;
- Knowingly providing payslips to employees which were false or misleading; and
- Knowingly providing information to the FWO and the FWO Inspector which were false or misleading.
The underpayments affected 163 employees, many of whom were temporary visa holders.
Sushi Bay Group operated a centralised payroll system which sought to conceal the underpayments by paying employees dual rates. Under this method, employees were paid their contracted hours at the correct Award rate of pay, but any additional hours were paid in cash at rates below the Award.
In addition, employees under 457 visas were paid per their employment contract, but were then required to pay back amounts to the employer. Pay guides and payroll records were set up to both facilitate and conceal the contraventions.
The director and the Sushi Bay Group were found to have engaged in “serious contraventions” by knowingly:
- Operating a payroll system and method of payment which resulted in the underpayment of employees;
- Requiring employees on 457 visas to pay back money to the employer; and
- Making and keeping false or misleading pay records.
In the penalty decision in Fair Work Ombudsman v Sushi Bay Pty Ltd (in liq) (No3) [2024] FCA 869 the Court ordered the four entities in the Sushi Bay Group to pay a total of $13.7 million dollars, while the director was separately ordered to pay $1.6 million.
In setting the penalties, the Court noted that this was “yet another case of exploitation of immigrant workers and a shameless but ultimately unsuccessful attempt to conceal it” (at [1]).
Despite the director’s submissions, the Court found that there was a need for both general and specific deterrence, in particular noting the circumstances in which the contraventions occurred and that the director continued to engage in the conduct after the 2019 court proceedings. The Court stated that the director took a “calculated risk” after the prosecution and must have considered that the penalties imposed then were the cost of doing business.
Accordingly, in this context, the Court considered that the penalties now needed to be high to make it “crystal clear” to the directors and employers that the contraventions of the FW Act were both “unacceptable and economically irrational”.
Lessons for employers
Non-compliance with the FW Act and the FW Regulations, including by not paying minimum entitlements to employees remains a prevalent issue, despite increased compliance measures to prevent and punish exploitation of employees including greater penalties and the introduction of the “serious contraventions” provisions.
Further measures will be introduced to the FW Act from 1 January 2025 with the criminalisation of intentional wage theft. This criminal offence attracts significant monetary penalties for employers and individuals while individuals also face up to 10 years imprisonment.
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