Farey's Transport relied on expert advice on what to pay staff. The experts were wrong, but Farey’s was fined $30,000
By Brad Gardner | January 24, 2011
A trucking operator has been slapped with a $30,000 fine after conflicting ‘expert advice’ caused it to underpay employees their correct entitlements.
Farey’s Transport left the NSW Chief Industrial Magistrates Court fined for underpaying 34 staff a total of $146,876 between November 2006 and March 2009.
The court heard Farey’s received competing advice from local solicitors, Fair Work Ombudsman inspectors, the Transport Workers Union, an employer association, and its current legal team on what Award its workers were covered by.
“In my view, the conduct of the defendant company is consistent with a high degree of confusion, combined with real uncertainty as to which competing set of ‘expert advice’ should be followed,” Chief Industrial Magistrate Gregory Hart says.
Workers were paid a flat rate for weekdays and weekends, which meant they did not receive correct annual leave entitlements and penalty rates for overtime, weekend and public holiday work. The underpayments ranged between $206 and $26,000.
Farey’s faced a maximum penalty of $132,000, and Hart ruled that a penalty was necessary to remind the company that workplace breaches may lead to substantial penalties.
The court was told local solicitors incorrectly told Farey’s its workers were covered by the Milk Treatment and Distribution Award rather than the Transport Industry (State) Award.
Hart says the company “genuinely believed” at various times that its employees were covered by the Milk Treatment and Distribution Award and its conviction wavered up and down depending on the advice it received at the time.
“There has been no attempt to do anything in a secretive or underhanded way. The defendant failed to get appropriate and timely expert advice concerning its legal obligations,” Hart says.
“In my view, the essence of the offence is that the defendant company failed at the relevant time to diligently pursue appropriate expert advice but instead seized upon whatever advice best suited its perceived operational needs.”
Hart says Farey’s administration staff lacked the formal training or experience in industrial relations.
The operator rectified the underpayments before court proceedings, prompting Hart to say it should be recognised for its actions.
TRANSPORTERS TEMPTED TO UNDERPAY STAFF
During the case, Hart ruled that the nature of the trucking industry meant operators were tempted to underpay staff.
“It is clear that the defendant operates in a highly competitive field with many competitors, and with customers which are frequently very large corporations happy to squeeze their subcontractors financially at every opportunity,” Hart says.
“In such an environment, there is an obvious and constant temptation for an employer to endeavour to lower their wages bill.”
Farey’s was also ordered to pay $844.80 for the cost of an agreed statement of facts compiled by the Ombudsman. The statement was initially agreed to by Farey’s, but the company withdrew its name.
The Ombudsman sought compensation to cover the legal costs of drafting the document.