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Businesswomen who underpaid because minimum pay rates are “just crazy” fined $228,000

legal court judgment ruling

A $228,000 fine has been handed down to the operator of a travel services company for underpaying an employee because she thinks the requirement of minimum pay rates is “just crazy”.

Melbourne businesswoman Na Xu was penalised $35,496 and her company Grandcity (GW) Travel & Tour Pty Ltd fined a further $192,840 for underpaying an immigrant employee approximately $19,567 during an 8-month period.

The Fair Work Ombudsman took action after receiving a request for assistance from a 24-year-old migrant. The employee, who had come from China, was paid rates of $9-$11 per hour between January and September 2013. Furthermore, Ms Xu and her company were found guilty of breaching sham contracting laws by classifying the worker as an independent contractor.

The FWO claims that Xu said Australia’s “minimum rate is crazy – triple the USA – just crazy” during their investigation, which also uncovered contraventions to record-keeping and pay-slip requirements, and an email sent from Grandcity to its employees informing them that they were “paid to do the work and not to negotiate any work terms and conditions”.

“The respondents have demonstrated a complete disregard for the minimum standards contained in the Fair Work Act and (Ms Xu’s) personal interpretation of minimum standards under workplace laws as ‘just crazy’ reinforces the need to demonstrate that compliance with minimum standards is not optional, it’s the law,” Judge John O’Sullivan said during his ruling.

“I am not satisfied she has shown remorse. There is no evidence she has taken steps to ensure that no further breaches will occur. I also accept there is also a need for general deterrence and to ensure employers understand the consequences of seeking to avoid obligations under the Fair Work Act.”

Fair Work Ombudsman Natalie James said the big penalty handed to Ms Xu, who continues to operate several Grandcity Travel & Tours agencies in Melbourne, Sydney, Brisbane, Perth and China, serves as a sign to others.

“This employer’s actions in knowingly trying to put in place an unlawful business model of engaging employees as contractors to avoid minimum pay rates is completely unacceptable,” Ms James said.

“Successful legal actions such as this also help to create a fair competitive environment for employers who are doing the right thing by creating a level playing field in relation to business costs.”