Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liquidation) (No 4)

The Fair Work Ombudsman brought proceedings against Foot & Thai Massage Pty Ltd (in liquidation) (FTM) and its sole director, Colin Kenneth Elvin, as well as its former employee, Mr Puerto. The claims related to the employment of seven massage therapists recruited from the Philippines. The Fair Work Ombudsman alleged that FTM had contravened numerous civil penalty provisions of the Fair Work Act 2009 (Cth). The issues for determination included whether FTM contravened the applicable award by failing to pay minimum wages and overtime rates, whether it contravened the National Employment Standards (NES), whether it failed to provide a Fair Work Information Statement, and whether it made unlawful deductions from the wages of the employees. The Fair Work Ombudsman also alleged that FTM threatened the employees with repatriation to the Philippines if they complained about their working conditions or exercised their workplace rights, and that it discriminated against them on the basis of their race, national extraction, and/or social origin. The Court found that the Health Services Award applied to FTM and the classification to which the massage therapists belonged was HP Level 1. It found that FTM contravened the award by failing to pay the massage therapists minimum hourly rates, public holiday penalty rates, Monday to Saturday overtime rates, and Sunday overtime rates. It found that FTM contravened the NES by requiring the massage therapists to work unreasonable hours over and above 38 hours a week, not paying each of the massage therapists the amount that would have been payable to them with respect to the period of untaken annual leave they had at the end of their employment, and failing to give each of the massage therapists the Fair Work Information Statement as required by the Act. The Court found that FTM contravened s 325(1) by unreasonably requiring six of the massage therapists to spend $800 per fortnight of their wages on its business by directing them to refund that amount during the so-called cashback periods. It also found that FTM contravened s 323(1) by deducting amounts from the wages of the massage therapists described in the records as "staff loans" when the deductions were not authorised by any of the exceptions in s 324(1). The Court found that FTM contravened s 535(1) by failing to make and keep records of the number of overtime hours worked by each of the massage therapists or their start and finish times of overtime hours worked, the periods of annual leave they took and the balance of their entitlement to annual leave from time to time, and setting out the nature of the termination of their employment. It also found that FTM contravened reg 3.44(1) by making and keeping pay records that, to its knowledge, were false or misleading as to the net amounts paid to six of the massage therapists because they did not record or reflect the amounts they were required to return in cash from their salaries during the so-called cashback periods. The Court found that FTM contravened s 340 of the Act by threatening the massage therapists with repatriation to the Philippines if they complained about their working conditions or exercised their workplace rights. It found that FTM contravened s 351(1) of the Act by reason of their race, national extraction, and/or social origin. The Court found that Mr Elvin was knowingly concerned in some of the contraventions. The Court found that the deed of company arrangement did not extinguish the underlying liability of FTM. The Court granted leave to the Fair Work Ombudsman to amend her pleadings after the conclusion of the hearing. The Court ordered that the parties use their best endeavours to agree on orders giving effect to these reasons, including the amount of the underpayments. If the parties were unable to reach agreement by 16 December 2021, the Court appointed Senior National Judicial Registrar Priestley as a referee to conduct an inquiry into the following questions in accordance with these reasons and to provide a written report to the Court setting out her opinion on those questions and her reasons.