Seven massage therapists underpaid almost $1 million

What happened

Foot & Thai Massage Pty Ltd ran a therapeutic massage business in Canberra, trading as “foot&thai”. It recruited seven massage therapists from the Philippines on temporary subclass 457 visas that it sponsored. Four started on 24 June 2012 and three on 15 April 2013. The sole director, Mr Elvin, hired them and set their wages. Another employee, Mr Puerto, supervised them.

Their contracts promised award penalty rates and an average of no more than 38 hours a week. In cross-examination Mr Elvin conceded the contracts were false, calling them “bodgie” and “sham”. The Court found he made “an economic decision not to comply with the Health Award”.

Six of the therapists were directed to hand back $800 a fortnight in cash for months at a time. Money was also deducted from their pay as “staff loans”. The trial judge also found that Mr Elvin threatened to send them back to the Philippines, and to have their families killed, if they complained to the authorities. On appeal, the finding of his personal involvement in the threats was set aside, without deciding whether they were made (see below).

The claims and the legal tests

The Fair Work Ombudsman sued the company, Mr Elvin and Mr Puerto under the Fair Work Act 2009 (Cth). Section 45 makes it a contravention to breach a modern award. The therapists were classified as Health Professional Level 1 under the Health Professionals and Support Services Award 2010, so they were owed its minimum, overtime and public holiday rates. Section 44 does the same for the National Employment Standards, the minimum conditions in the Act, including limits on unreasonable hours and payment of unused annual leave when a job ends.

Section 323 requires wages to be paid in full, and s 325 stops an employer unreasonably requiring a worker to spend or hand back wages for its benefit. Under s 550, a person “knowingly concerned” in a contravention is treated as having committed it. The general protections in ss 340, 343 and 351 forbid threats to stop workers complaining, coercion, and harmful treatment because of race or national extraction. In a 2021 judgment Justice Katzmann found the company had breached these protections, mostly with Mr Elvin's involvement. This 2024 judgment decided the remedies.

What the Court ordered

After small payments made during the company's administration, the shortfall was $971,092.27: between about $120,000 and $159,000 for each worker. The company argued that the deed its creditors accepted in administration had settled the workers' claims. Ms Amacio, for example, had recovered under it less than 15% of what she was owed.

The judge still ordered the company to pay. Its records were false and incomplete, so the administrators were very likely misled. The workers did not know what they were really owed, and as 457 visa holders they could not use the government's Fair Entitlements Guarantee scheme. The deed bound only claims against the company, so it could not protect Mr Elvin, and he was ordered to pay too.

Section 545 lets the Court order compensation for any loss caused by a contravention. There was no evidence of a psychiatric illness, but that was no bar. The judge accepted that each therapist suffered “significant emotional harm and distress” over three to four years, and awarded $30,000 to each of the four 2012 starters and $25,000 to each of the three 2013 starters, whose distress lasted less time.

Penalties

Civil penalties are meant to deter, so that breaking the law is not seen as “an acceptable cost of doing business”. The judge found the conduct “extremely serious” and mostly deliberate, and no respondent showed any contrition. She ordered penalties of $778,100 against the company, $150,140 against Mr Elvin and $38,650 against Mr Puerto. The company's liquidation was no reason for a lower penalty, because deterring others does not depend on whether a penalty is ever paid.

The appeal

Mr Elvin, who represented himself, appealed. On 21 July 2026 the Full Court allowed the appeal in part in Elvin v Fair Work Ombudsman [2026] FCAFC 92. Justices McDonald and Vandongen held he was denied procedural fairness: the trial judge drew an inference against him from his failure to call Mr Puerto as a witness without first warning him of that risk. Justice Collier would have dismissed the appeal.

Findings resting on his own admissions or the records survived: his involvement in the award underpayments, unpaid annual leave on termination, the missing Fair Work Information Statements, unauthorised deductions and record-keeping failures. The findings that he was involved in the cashbacks, the unreasonable hours, the false records, the threats and the discrimination were set aside, while the declarations against the company stand. The Court will hear the parties on whether his compensation and penalties change, and whether any claim should be retried.

What this means for you

If you are underpaid, the company may not be the only one responsible. A director or manager involved in an underpayment can be ordered to repay it personally, and a company's collapse does not protect them. Being made to hand wages back in cash can be unlawful, and a court can compensate the distress of threats without a medical diagnosis.

Workers on sponsored visas are covered by the same Fair Work pay rules as everyone else. Since 1 January 2025, intentionally underpaying an employee is also a crime under s 327A. Keep your own record of hours and pay, and consider getting advice early: an underpayment claim generally must be brought within six years.