The Fair Work Ombudsman is taking the former owner of a Canberra massage business to court for allegedly underpaying workers by almost $1 million and threatening their families if they spoke out.
Seven foreign workers from the Foot and Thai massage parlour in Belconnen claim their employer, Colin Kenneth Elvin, and supervisor, Jun Millard Puerto, underpaid them by about $900,000 between 2012 and 2016.
It is alleged the six women and one man were required to work an average of more than 65 hours per week, but were generally only paid for 38 hours per week.
The Fair Work Ombudsman has also alleged that six of the employees were required to pay back $800 of their wages per fortnight over a nine-month period when Mr Elvin deemed the shop was not getting enough income and customers.
Fair Work Ombudsman Natalie James said the workers and their families were then threatened.
“These very vulnerable workers were told that if they complained they would be sent back home, or that their family would be the subject or physical violence or indeed that they might even be killed,” she said.
The Ombudsman has commenced civil legal proceedings in the Federal Court against the former operators of the parlour.
The business went into voluntary administration and is now run by new owners who are not accused of any wrongdoing.
‘Among the most shocking allegations’ Fair Work has seen
Ms James said the workers were all provided accommodation at a house in the suburb of Higgins, where the gates were locked overnight.
They were allegedly transported between the Higgins property and the massage parlour in a van each working day.
Ms James described it as “some of the most shocking allegations of exploitation” the agency had ever seen.
“We allege that the threats made to these employees were ongoing while they were in Australia and designed to conceal the way they were being callously exploited,” she said.
“This type of conduct has no place in Australia and it deserves utter condemnation and appropriate sanctioning.”
The Fair Work Ombudsman is seeking penalties from both Foot & Thai Massage Pty Ltd and individuals Mr Elvin and Mr Puerto.
The Ombudsman is also seeking court orders requiring Mr Elvin and his company to back pay the workers in full and to pay additional compensation to the employees for the loss or damage they allegedly suffered as a result of some of the alleged breaches.
Most cases never make it to court
Ms James said while this case of alleged exploitation would be brought before a judge, many other cases flagged with the Ombudsman never made it to court.
“I think we have more than 80 cases in the courts right now as we speak,” she said.
“[But] we certainly wouldn’t be able to take every matter involving an underpayment to court — we have well over 25,000 people who come to us for help about a range of issues every year.
“Matters that go to court take on average four years to resolve.”
Labor spokesman for workplace relations Brendan O’Connor said his party wanted to examine the resources available to the Ombudsman.
“I do think that there is significant — if not widespread — intentional underpayment in some sectors of our labour market,” he said.
“And I think too often business that do the wrong thing, factor in that if they get caught — all they’ll have to do is pay back the money they owe.
“Certainly Labor believes we need to increase the penalties for intentional underpayment and we do believe we need to examine the resources of the FWO. And the FWO needs to use the powers at its disposal.”
Workplace Minister Craig Laundy said the Turnbull Government “had zero tolerance for the exploitation of workers”, but said “in the vast majority of cases the FWO was successful in obtaining back pay”.
“This is why the Turnbull Government increased funding to the Fair Work Ombudsman by $20 million and introduced tougher laws to crack down on employers who exploit vulnerable workers – including stronger investigative powers for the FWO and penalties that are now 10 times higher than previously,” he said.