A labour hire company in Melbourne was fined more than $42,000 for underpaying two workers a total of $1,970 and breaching sham contracting laws. McDonald Murholme Managing Director Alan McDonald weighed in that the court’s decision sends a solid warning to Australian businesses.

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Labour hire company fined $42,000 for underpaying two workers less than $2,000 and breaching sham contracting laws

A labour hire company in Melbourne has been fined more than $42,000 by the Federal Circuit Court for underpaying workers and breaching sham contracting laws.

Franco Cardamone’s business, which trades as Howsitgoingmate, has been found to have underpaid two employees a total of $1,970 for short period of manual work in 2013 and 2014.

The court also found Howsitgoingmate breached sham contracting laws by misclassifying one of the employees as a contractor.

Cardamone was also found to have breached the law after failing to respond to a notice requiring him to hand over employment records to Fair Work inspectors.

Judge Heather Riley said the business had been the subject of a “litany of complaints”.

She also pointed out the employer watchdog had made Cardamone aware his conduct was unlawful.

“However, he continued to engage in it,” Riley said in her judgment.

“Consequently, the court can only conclude that the breaches were deliberate.”

Fair Work Ombudsman Natalie James said in a statement the court’s decision sends a strong message to employers doing the wrong thing.

James said deliberately underpaying workers and ignoring warnings is “extremely serious” conduct in comparison to unintentional breaches of workplace laws.

“We have received more than 30 underpayment allegations from employees of businesses operated by Mr Cardamone since 2013, and he must now pay a financial penalty for his unlawful and unacceptable conduct,” James said.

Alan McDonald, managing director of employment law firm McDonald Murholme, told SmartCompany the court’s decision sends a “solid warning” to Australian businesses.

“Over the last decade there has been an unhealthy trend of encouraging labour-hire companies to provide labour for work which should be performed by permanent employees as it is not temporary or short-term work,” McDonald says.

“The enforcing of award pay rates is more important than ever before.

“This case possibly represents the tip of the iceberg and must be a solid warning for the future.”

SmartCompany contacted Howsitgoingmate but the company declined to comment.

Reference:  ‘Labour hire company fined $42,000 for underpaying two workers less than $2,000 and breaching sham contracting laws’, The SmartCompany, 11 December, 2015.

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