The Fair Work Ombudsman has secured $966,890 in court-ordered penalties in a civil case that involved “systematic exploitation” of Filipino workers by the director of a Canberra massage parlour who allegedly threatened to have the workers’ families killed if they complained.
The penalties have been imposed in the Federal Court in response to seven Filipino workers being underpaid a total of $971,092 and subjected to coercion, discrimination and adverse action at the ‘foot&thai’ massage parlour in Belconnen between June 2012 to February 2016.
Justice Anna Katzmann found that the visa holder workers – six women and one man who were aged in their 20s and 30s at the time, and spoke limited English – had spent three to four years “living in fear” of the parlour’s owner and director, Canberra man Colin Kenneth Elvin.
Justice Katzmann has imposed a $778,100 penalty against Mr Elvin’s former company Foot & Thai Massage Pty Ltd, which operated the parlour, and a further $150,140 penalty against Mr Elvin.
In addition, the workers’ former supervisor – Filipino man Jun Millard Puerto, who was sponsored by Mr Elvin’s company on a 457 skilled worker visa – has been penalised $38,650 for his involvement in a number of the breaches, including the threats to workers.
Mr Elvin and Foot & Thai Massage Pty Ltd have also been ordered to pay a total of $1.166 million in back-pay and compensation, plus interest, to be provided to the workers.
With Foot and Thai Massage Pty Ltd now in liquidation, the Court has ordered that if the back-pay and compensation are not paid, the penalties (including those imposed on Mr Elvin and Mr Puerto) can be distributed to the workers, who have been back-paid only a fraction of their outstanding entitlements since 2016.
Fair Work Ombudsman Anna Booth welcomed the substantial total penalties, which are the third-highest in the national regulator’s history.
“This matter is one of the most shocking cases of exploitation the Fair Work Ombudsman has ever encountered and deserves the strongest possible condemnation,” Ms Booth said.
“The deliberate and calculated exploitation of vulnerable migrant workers has absolutely no place in Australian society. No visa holder worker should ever face employer threats to the safety of their family, or threats to be deported if they use their workplace rights to raise concerns about their employment.”
Ms Booth added:
“These substantial penalties send a clear message that those who deliberately defy Australia’s workplace laws and shamefully exploit vulnerable migrant workers will face serious consequences. The Fair Work Ombudsman will continue to ensure the full weight of the law is felt by those involved in such appalling conduct.
“Visa holders in Australia have the same workplace rights as all other workers, and enforcing those rights remains an enduring priority for the Fair Work Ombudsman.”
Ms Booth said those tempted to breach Australia’s workplace laws should be aware that various changes to the Fair Work Act from 2017 onwards meant that far higher penalties could be imposed if deliberately exploitative conduct occurred today.
The Fair Work Ombudsman commenced an investigation into the foot&thai parlour in 2016.
Fair Work inspectors found that the seven exploited workers had been recruited from the Philippines in 2012 and 2013 and sponsored by Mr Elvin’s company to work in Australia on 457 visas.
In Australia, the workers were required to work extensive hours as massage therapists at foot&thai – often working from 9.45am to 10pm or 10.30pm six days per week – but they were not paid the overtime or penalty rates required by the Award.
Six of the employees were also required to pay $800 of their wages per fortnight back for more than eight months when the shop was doing poorly.
The seven employees were transported from a property in Higgins, where they resided, to the massage parlour and back in a van, commonly driven by Mr Elvin or Mr Puerto, each working day.
Each of the workers had financially dependent family members – including three with children – in the Philippines and routinely transferred part of the wages to their families.
Mr Elvin, with some involvement from Mr Puerto, threatened to send the workers back to the Philippines if they told anyone about their working conditions and threatened that he would arrange for their families in the Philippines to be killed if they reported Mr Elvin or his company to the Department of Home Affairs (formerly the Department of Immigration and Border Protection).
The conduct of Mr Elvin and his company breached the provisions of the Fair Work Act that make it unlawful to coerce employees or take adverse action against them to prevent them from making a complaint about their employment.
Their conduct also amounted to workplace discrimination against each of the workers because of their race and national extraction.
Wage-related contraventions included underpayment of ordinary hourly rates, public holiday rates and overtime rates the workers were entitled to under the Health Professionals and Support Services Award 2010.
Underpayments of individual workers ranged from approximately $120,000 to $159,000.
Laws relating to unauthorised deductions, unreasonable requirements to spend wages, requiring workers to work unreasonable additional hours, payment of annual leave entitlements, failing to provide workers with a Fair Work Information Statement and providing false records to inspectors were also breached.
Justice Katzmann found that Mr Elvin had hired the workers, set their wages and conditions, and managed the business of Foot and Thai Massage Pty Ltd.
“He was the person who decided to underpay the massage therapists, the person who required them to work unreasonable hours, and the person who threatened them and took other adverse action against them,” Justice Katzmann said.
Justice Katzmann found that the conduct was deliberate, “extremely serious” and involved “systematic exploitation” of vulnerable visa holders who were in a precarious position as their continuing residence in Australia depended on their continuing employment.
Justice Katzmann found that workers were enticed to come to Australia to work for Foot and Thai Massage on false promises, including that they would be paid Award rates and not have to work more than an average of 38 hours a week.
Justice Katzmann found that Mr Elvin believed the workers would be prepared to put up with below award rates and conditions because they were paid even less in the Philippines and were unlikely to complain because their families, to whom they were devoted, lived in the Philippines and were dependent on their financial support.
Justice Katzmann accepted the FWO’s submission that each of the workers suffered “significant emotional harm and distress as a result of living in fear of [Mr Elvin] becoming angry and sending them back to the Philippines or of killing their families back in the Philippines [which they endured] for a sustained period of approximately 3 to 4 years”.
“I had the strong impression from watching and hearing them in the witness box that their suffering was ongoing,” Justice Katzmann said.
Justice Katzmann found that Mr Elvin and Mr Puerto had not exhibited any contrition and that there was “no evidence to indicate that either man has learned anything from the Ombudsman’s investigation or the proceedings”.
Justice Katzmann found that substantial penalties were required to deter Mr Elvin, Mr Puerto and others from similar conduct in future.
