Exploitative cashback scheme: Worker made to satisfy employer’s PAYG, superannuation obligation

A company and its owner have been fined almost $200,000 after it failed to pay an employee on a student visa for 10 weeks and made her cover her own wages, the firm’s superannuation contributions, and tax obligations.

The Fair Work Ombudsman (FWO) has slapped a $177,000 fine on a firm and its owner for an unlawful cashback scheme that left one assistant accountant underpaid by $40,164.49 and unpaid for public holidays and accrued but untaken annual leave entitlement when her employment concluded.

The worker was a Nepalese national in her 30s on a temporary graduate visa at the time.

She worked as a part-time assistant accountant for Innovative Associates and its owner, Dila Ram Kharel, between July 2019 and December 2020.

The ombudsman learnt the assistant accountant was required to transfer amounts into bank accounts that Kharel controlled or had access to, after which Kharel went on to transfer the money to the firm’s bank account, which it would use to pay the worker’s wages and satisfy PAYG withholding and superannuation obligations in respect of the worker.

In total, the firm made its employee pay a total of $32,907 into Kharel’s bank accounts, after which it repaid the worker $27,873.50 in the form of “wages”.

It was not until the assistant accountant notified the Fair Work Ombudsman that an investigation into the firm’s conduct commenced.

The ombudsman found the firm breached record-keeping and payslip laws by knowingly providing a Fair Work inspector with false or misleading payslips.

Following an investigation by the ombudsman, the firm and Kharel faced the Federal Circuit and Family Court of Australia (FCFCOA), which ordered them to pay penalties of $148,000 and $29,000, respectively, for the cashback scheme, leaving the worker with no wages at all, in breach of the National Minimum Wage Order.

FCFCOA Judge Gillian Eldershaw noted that the firm only began rectifying the contraventions two years after FWO commenced its investigation.

“[The worker] was working for minimum wage and, I infer, could ill-afford to be held out of being paid her lawful entitlements for any period, let alone the time that elapsed,” Judge Eldershaw said.

The judge said that the penalties were necessary to deter the firm and its owner from further breaches due to their “disregard for their obligations” and to deter other employers from similar conduct.

“It is important that the penalty sends a strong signal to the community that [Innovative Associates’ and Kharel’s] conduct is an unacceptable way to operate a business,” Judge Eldershaw said.

FWO Anna Booth said this outcome shows that “exploiting workers through unlawful cashback schemes is serious conduct that will not be tolerated”.

“This company implemented a cashback scheme to try to give the impression that it was complying with its legal wage obligations, when in fact it was deliberately exploiting a vulnerable migrant worker for its own gain,” Booth said.

“Unlawful cashback schemes are one of the most blatant and appalling forms of exploitation, and we are committed to holding the perpetrators of such schemes to account.”

Want to see more stories from trusted news sources?
Make HR Leader a preferred news source on Google.