The Fair Work Ombudsman’s first racial discrimination litigation has resulted in penalties of $211,104 against the former operators of a Tasmanian hotel after they deliberately exploited two Malaysian employees of Chinese descent.
The Federal Circuit Court has fined Chang Yen Chang of NSW, who until 2014 owned and operated the Scamander Beach Resort Hotel on the east coast of Tasmania, $35,099. He was the director and company secretary of Yenida Pty Ltd, which was fined a further $176,005.
During the litigation, commenced in 2015, the Fair Work Ombudsman successfully proved in Court that Chang and his company breached the racial discrimination provisions of the Fair Work Act by treating the two Malaysian employees, who are husband-and-wife, differently to Australian staff by underpaying them a total of more than $28,000, requiring them to work extra hours and failing to record their hours of work
Fair Work Ombudsman Natalie James today said: “This is the first time the Fair Work Ombudsman has taken legal action against an employer for racially discriminating against employees”.
“This employer knew that all staff were lawfully entitled to minimum Award pay rates but chose to pay the Malaysian couple significantly less than Australian staff because of their race, which is unlawful and completely unacceptable,” Ms James said.
“It is an uncomfortable truth that racial discrimination is a driver behind some of the exploitation of migrant workers in this country.
“The Court’s ruling in this matter sends a message that singling out migrant workers for exploitation is serious unlawful conduct and significant penalties apply.
“All workers in Australia are entitled to our minimum wages, irrespective of their background, language skills or visa status.
“We are actively seeking to dispel the myth that it’s OK to pay overseas workers a ‘going rate’ that undercuts the lawful minimum wage rates that apply in Australia.”
“Our success in this case is a warning to any employer tempted to make employment decisions based on race: the Fair Work Ombudsman can and will seek penalties for discrimination as well as pursuing any unpaid entitlements, and we will do so via court action if necessary.”
The court heard evidence that for Chinese, there is a culture of helping out your family and working hard for them.
Judge Barbara Baker said she did not accept Mr Chang’s denial that he referred to the couple as “family” to put pressure on them to work hard for him.
The court found that Chang and his company “made a deliberate decision to treat (the Malaysian couple) differently to other employees”. It said the Malaysian husband was “vulnerable and dependent on his employment with Yenida to remain in Australia”.
The Malaysian husband was recruited as a chef through a Malaysian newspaper advertisement in 2007 and Chang’s company sponsored him on a 457 skilled worker visa to work in the hotel’s restaurant until 2014.
The court heard he was required to work up to 57 hours across six days a week.
Between 2010 and 2014, he was paid an annual salary of $45,240 to $46,280, which was not enough to cover overtime and penalty rates for work on weekends and public holidays. The court heard he had been underpaid a total of $20,550.
Judge Baker said the husband negotiated and accepted the terms of his employment without knowledge of workplace laws in Australia.
The man’s wife was employed as a kitchen-hand in the restaurant on a spouse visa between September 2009 and January 2010 and was required to work between 35 and 51 hours a week for a flat weekly rate of $446 to $594. She was allegedly underpaid $8775 over four months. She gave evidence that she quit because of the high workload.
The court heard Australian employees were required to work five or fewer days per week and were paid minimum hourly rates, penalty rates and loadings owed under the Hospitality Industry Award.
The court found that 15 Australian employees were allegedly underpaid a total of $26,488, an average of $1765 each, because the Award had been applied incorrectly.
The Fair Work Ombudsman said the Malaysian couple and Australian employees have been back-paid in full.
Ms James says the Fair Work Ombudsman also has the power to take enforcement action if there is clear evidence of a contravention.
“Taking these matters to Court is difficult and resource intensive but there is a strong public interest in doing so,” Ms James said.
Ms James says it is concerning that the case is another example of a business operator from a culturally and linguistically diverse background underpaying workers from his own ethnic background.
“This case is another chance to make it clear that lawful minimum rates apply to all employees in Australia and they are not negotiable,” she said.
Ms James says it is also concerning that the matter was the latest of a string of cases in which the Fair Work Ombudsman has secured penalties in Court against hospitality industry employers for serious non-compliance issues.
“Despite hospitality industry workers making up 7.2 per cent of the labour market, legal actions against hospitality employers account for almost one-third of our litigation activity,” she said.