A Federal Circuit Court judge has ruled the Fair Work Ombudsman “greatly misstated” underpayments made by national cleaning contractor Pioneer Facility Services, which resulted in the loss of its contract with Myer.
Judge Alistair McNab ruled last month the Ombudsman “had greatly misstated Pioneer Facility Services’ alleged underpayments and was forced to withdraw allegations the head of the company was involved in the underpayments.”
The underpayments were in relation to Pioneer cleaners at Myer stores in Melbourne, Queensland and Hobart in 2014. The Fair Work Ombudsman alleged at the time Pioneer Facility Services personnel underpaid nine employees more than $18,000 between April and November 2014.
A press release issued by the Ombudsman also named Pioneer’s director Aaron Dickinson, as a person who was “put on notice as early as March 2014 of the need to pay employees minimum award rates.”
However, the FWO withdrew its claims against Dickinson after proceedings were issued, as “there was never any evidence that Dickinson knew about or was otherwise involved in the underpayment as alleged”.
The FWO had initially asked the court to impose penalties totalling between $118,320 and $159,120. However, Judge McNab fixed the penalties at $2000 per breach ($16,000 in total) after warning higher penalties would be an “active disincentive for responsible ongoing businesses to provide co-operation with the regulator”.
Pioneer claims the allegations resulted in the company losing its contract with Myer, which equated to a financial loss of approximately $9,000,000 – $10,000,000 in revenue annually.
Pioneer said it was also immediately removed from a tendering process it was in with Queensland University – a contract worth approximately $5,000,000 in revenue per annum.
In a statement issued to INCLEAN this week, the Fair Work Ombudsman said it routinely publicises its legal actions to raise awareness that underpaying workers is a serious matter and significant consequences can apply.
“The FWO takes its model litigant responsibilities seriously and pursues litigation only when it is in the public interest to do so,” said a FWO spokesperson.
“In this matter, the FWO has successfully secured penalties against a large employer for underpaying vulnerable workers, including a number of migrant workers from non-English speaking backgrounds, who were reliant on minimum Award rates and entitlements.”
In his ruling, McNab said Pioneer personnel fully cooperated with the Ombudsman both in the investigation and in the conduct of the proceeding and that the contraventions in the case arose largely as a result of oversight or a misunderstanding of provisions of the award.
“I do not consider that the contraventions were deliberate or arising as a result of gross negligence,” he said.