Pecuniary penalty awarded to employee made to do unpaid “dips” before a shift

Case background

The employer operated a petrol station and retail store. The employee was a foreign student who was hired as a trainee console operator. He was paid less than $20/hour. His shift was from midnight until 6am.

Employee required to perform 15 minutes’ unpaid work before every shift

The employer required the employee to arrive at the workplace 15 minutes before this shift. He was told to do “dips” – a manual measuring and recording of fuel levels in the underground storage tanks before his shift began. He was also asked to pick up any litter around the petrol station. This period before the shift began was also the time when the handover took place between the employees ending their shift and the employees beginning theirs. And yet, the console operator’s roster hours, and thus his paid work, began at midnight. The employer did not pay for the 15 minute “dips”.

Employer demanded “no meal or toilet breaks” during the shift

The employer forbade the console operator taking toilet breaks because the toilet was outside the store. The employee was also told to go to the toilet and eat before his shift as he would not be allowed to take a meal break during his shift. Just the same, however, the employer automatically deducted 30 minutes’ pay for meal breaks even if the console operator never took any toilet or meal breaks during his shift.

Employer required employee to “volunteer” to do overtime work

When another regular employee went on leave, the site manager asked the trainee console operator if he wanted to work more hours. The console operator wanted to learn everything about the business and so he signed a request for more hours. Even when the console operator rendered overtime work, he was compensated at the normal rate instead of the overtime rate for those hours worked overtime.

Application for unpaid and underpaid work

The employee lodged an application to recover the pay for all those unpaid dips and the meal breaks which were deducted from his pay. Claiming to have been underpaid his overtime work, the console operator also claimed overtime penalty payment.

FWC: 15-minute dips not part of “training”

The employer at first said that the 15 minute “dip” time was not required by the employer but was only required by the site manager. The employer also reasoned that since the console operator was a trainee and the 15-minute “dips” were really training for his benefit and should not be compensated. Thus, whilst it was work, it was part of the training of the console operator and should not be compensated. The Fair Work Commission found that the duty to perform the dips was emphasized during the training and was part of the contract of employment. Thus, it was required work for which the console operator had to be paid.

FWC: Deductions for meal breaks, not a payroll mistake

As for the meal and toilet breaks, the FWC found that even when the console operator took toilet and meal breaks, if the console operator were needed to perform a service for customers, he was called away from his meal break to do work. Thus, the meal and toilet breaks he might have taken were still times when the console operator worked and times for which he should have been compensated. It was not possible for the employee to take meaningful breaks from work so that his pay could be deducted for taking such breaks. Since the employee did not take toilet or meal breaks, his hours (and thus, his pay) should not have been deducted for meal breaks.

FWC: Employee did not “volunteer” to do over time, he was required

As for the claim of underpaid overtime work, the employer asserted that the console operator was only given overtime work because he had asked for it and because he had “volunteered” to perform overtime work. The FWC found that even when the console operator signed a request form to be allowed to work overtime, the overtime work was performed to fill in temporary rostering gaps due to staff members calling in sick. He was also made to do overtime work to assist when the store had its busy periods.

Award of backpay

Thus, the FWC awarded the console operator backpay for all the dips that went unpaid and for all the meal breaks that were deducted from his pay. He was also awarded overtime penalty pay and on top of this, he was awarded interest on all paid entitlements that were 2 years overdue.

Award of pecuniary penalty

The console operator asked for the FWC to award pecuniary penalty for the brazen contraventions by the employer. The FWC held that the failure to pay for the dip times was not the mistake of one site manager but that this was a policy of the employer handed down from the senior levels of management. The deduction in the employee’s pay for meal breaks was automatically made by the payroll computer system despite lack of evidence that the employee took a meal break. Clearly, this shows a deliberately programmed payroll system that never considered whether the employee actually took a break. This was not due to carelessness or a mistake. It shows a serious contravention of employment laws. And the refusal of the employer to pay the employees overtime rates for overtime hours worked.

Reasoning behind the pecuniary penalty

The FWC held that the console operator was paid very low trainee rates which makes the contravention by the employer a much more serious wrongdoing. More importantly, there is no evidence that the employer took reasonable steps to correct company policy or the payroll system. There is no evidence that there was an audit of the impact the contraventions had on employees. Thus, there is a need to deter the employer from committing similar contraventions in the future. This will also set an example for other employers in the retail industry. Thus, the pecuniary penalty awarded was 50% of the maximum appropriate penalty payable for the unpaid work contravention, 45% of the maximum penalty payable for the deductions for untaken meal breaks and 25% of the maximum appropriate penalty for the overtime pay contravention. The employer was ordered to pay a total of $64,800 to the employee.

Mathew Shahin Enterprises Pty Ltd [2020] SAET 152 (14 August 2020)