Servo chain ordered to pay $64,800 over unpaid shift starts and breaks

What happened

Thomas Mathew worked as a part-time console operator, the person behind the counter, at a petrol station and convenience store in Fulham, in Adelaide's west. His employer, Shahin Enterprises, runs the On The Run chain. He worked there from November 2015 until December 2016, on trainee rates of less than $20 an hour, while on a visa that required 40 hours of paid work a fortnight.

From his first days of training he was told to be at work before his shift. A written instruction to all new employees said: "You are required to be ready to start work 10 minutes before your shift begins." In that time he had to do the 'dips' (manually measuring the fuel in the underground tanks), walk the site checking for litter, hazards or suspicious activity, and take a handover from the outgoing staff. None of it was paid. He was told not to record his true starting time.

His longer shifts also carried an unpaid 30-minute meal break. But when he was rostered alone, no relief staff were provided, and he was told to eat before work and not to use the toilet, which was outside the building. In practice he worked right through his shifts. The payroll system deducted 30 minutes' pay for every shift over six hours anyway.

Over a busy holiday period he agreed to work extra hours to cover staff absences. To get them he had to sign a form saying he was requesting 'voluntary overtime' at ordinary rates, and he was paid no overtime loading.

The underpayment claim and the appeal

Mr Mathew took his employer to the South Australian Employment Court, which can hear claims under the Fair Work Act 2009 (Cth). On 3 June 2019 the Court found he had been underpaid $2,663.91 in total. It declared that the company had breached s 323 of the Act, which requires an employer to pay an employee in full for the work they perform, in three ways: the unpaid pre-shift work, the meal-break deductions and the missing overtime loading.

The company appealed to the Full Court of the Federal Court, which dismissed the appeal on 31 March 2020. Meanwhile the company issued a media statement saying it merely 'encouraged' staff to arrive early. The Court later noted that this misdescribed its finding that Mr Mathew was required to be there, and that the statement had never been corrected.

What the Court decided

Mr Mathew then asked the Court to impose a pecuniary penalty, a civil fine for breaching a workplace law. Under s 546 the Court may order a penalty it considers appropriate once it is satisfied a 'civil remedy provision' has been breached. The maximum at the time was $54,000 per contravention.

Section 557 treats repeated breaches of the same provision arising from the same course of conduct as one contravention, so a breach on every shift does not multiply the maximum. Deputy President Lieschke treated each type of breach as a single grouped contravention.

He imposed $27,000 for the unpaid pre-shift work (50% of the maximum), $24,300 for the meal-break deductions (45%) and $13,500 for the overtime (25%): $64,800 in total, to be paid to Mr Mathew within 21 days.

Why: how a penalty is set

A civil penalty is mainly about deterrence. It must be high enough that neither the employer nor others treat breaking the law as an acceptable cost of doing business. The Court weighs how deliberate the conduct was, whether it was systematic, how senior the people responsible were, the employer's compliance systems, and whether it has shown remorse and fixed the problem.

On the unpaid work, the Court accepted the description 'brazen'. It was "deliberate exploitation of a low paid hard working employee", built into daily routines and backed by the possibility of discipline. The meal-break deductions came from a payroll system programmed to dock pay regardless of whether a break was taken, which the Court found was "at least reckless". It rejected the claim that the overtime breach was a misunderstanding: the form was used to deny penalty rates for work the company had asked him to do.

The modest dollar total did not help the company. For each long shift Mr Mathew lost three quarters of an hour's pay, over 10% of his trainee wage. The Court also found no demonstrated contrition and no evidence of any audit of whether other employees were affected. The rostering system had not changed, and the new time-recording system still left a risk of non-compliance. It found Mr Mathew was a vulnerable worker. Because he had been put to enormous time, trouble and expense and could not recover his legal costs, the penalties were paid to him rather than to the Commonwealth.

What this means for you

If your employer requires you to arrive early to open up, count stock, take a handover or do safety checks, that time is work and should be paid. A deduction for an unpaid break is only lawful if you actually get the break. Keep your own note of the times you start, finish and take breaks, especially if you are told not to record them.

Signing a form that your employer makes a condition of getting extra hours does not necessarily give up your entitlement to overtime rates. An employee can bring an underpayment claim and ask for penalties themselves; the general time limit for an underpayment claim is six years. It is worth getting advice early if you think you have been underpaid.