The Case

Lu’s Healthcare Pty Ltd (Lu) failed to properly pay two massage therapist employees under the applicable Health Professionals and Support Services Award 2010 (the Award). Instead, Lu paid its employees a percentage of the massage fee. This resulted in underpayments to one employee of $33,000 and to another of $21,000.

Lu also ‘fined’ the employees by docking their pay:

• $100 if they were late to work or absent without notice;
• $50 if they showed a lack of passion and hospitality; and
• $20 if they made too much noise, played around and slept or lay on a massage table.

Lu also threatened to demote the employees to apprentices.

The Fair Work Ombudsman commenced proceedings in the Federal Circuit Court on behalf of the employees.

The Verdict

In addition to ordering the underpayments be paid, the Court imposed a penalty of $112,860 on Lu and $5,940 on the director for failing to comply with their obligations under the Award and under the Fair Work Act 2009 (Cth) (FW Act).

The Lesson

As a minimum, employers must pay employees in accordance with the relevant modern award, if one is applicable to the employee.

Employers are not permitted to make deductions from employees’ pay unless this is in accordance with the FW Act and is agreed to by the employee in writing. If an employee’s conduct is unacceptable, employers should instead performance manage them.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.