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Beauty salon avoids court over wage underpayment

Adam Zuchetti
Adam Zuchetti
06 July 2018 2 minute readShare
Beauty salon

A suburban hair and beauty salon has escaped legal action by the Fair Work Ombudsman for wage underpayment, committing to repay its employees over $25,000 and overhaul its compliance procedures.

Ohmed, which operates OKS Hair and Beauty Salon in Sydney’s western suburbs, was found to have underpaid its seven employees to the tune of $25,045 in just over a year, between March 2016 and May 2017.

The workers were employed as casual salon assistants, and several were foreign nationals.

Ohmed paid some of the staff members cash-in-hand, but all were found have been paid below minimum rates under the relevant award, for both ordinary hours and hours attracting penalty rates.

The workers were also not provided with payslips, nor were they paid their superannuation entitlements.

Nevertheless, the business and its operator escaped legal action by fully co-operating with the Fair Work Ombudsman (FWO).

The business has repaid the workers in full and entered into Enforceable Undertaking (EU), which binds it overhaul its workplace and pay procedures, and engage an external auditor to review its worker payments three times over the next two years to ensure compliance.

It will also make a $5,000 donation to the Marrickville Legal Centre, which was involved in the case.

Acting ombudsman Kristen Hannah explained that not all businesses found to have underpaid their workers end up before the courts.

“EUs allow the Fair Work Ombudsman to achieve strong outcomes against companies that breach workplace laws without the need for civil court proceedings, which are often lengthy and can significantly extend the time it takes for workers to receive their entitlements,” Ms Hannah explained.

“This EU puts in place robust measures to ensure that … Ohmed Pty Ltd take real steps to improve their workplace practices and ensure sustained compliance with workplace laws going forward. This will make a real difference to workers.”

My Business asked the FWO for clarification on when enforceable undertakings are used instead of dragging a business through the courts, and why it was deemed appropriate to issue one in this case.

The FWO uses Enforceable Undertakings (EUs) where an employer has acknowledged they’ve breached the law, accepted responsibility and agreed to cooperate with us and fix the problem,” a spokesperson replied.

Many of the initiatives included in EUs help to build a greater understanding of workplace responsibilities, promoting sustained compliance with workplace laws going forward. Importantly, we can take legal action in a court to enforce the terms of an EU if it is not complied with.

The spokesperson said that in this instance, Ohmed was found to have had no previous compliance history, fully cooperated with the FWO throughout the investigation and rectified the underpayments in full.

The EU imposes significant obligations on the employer to ensure real steps are taken to improve their workplace practices and ensure sustained compliance into the future. The EU also extends to ... the director’s mother, who assisted with the daily running of the running of the business. [She] is required to participate in training even though she is not an employee or shareholder of Ohmed Pty Ltd. Such a provision would not be able to be obtained in any legal proceedings,” they said.

The Fair Work Ombudsman has a range of tools at its disposal to address issues of non-compliance and assist employees and employers to secure the best outcome when resolving workplace disputes. Though we will continue to pursue court action in response to egregious workplace breaches and exploitation, it is important to note that litigations are not the only tool in our bag.


Beauty salon avoids court over wage underpayment
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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