A concerning case of payroll abuse under the JobKeeper scheme unearths wider implications about underpayment and mistreatment of Australia’s most vulnerable workers.

The owner of a Queensland school bus company has recently been brought before the Fair Work Ombudsman (FWO) and subsequently fined for abusing the JobKeeper Payment scheme while his business was in downturn. 

The FWO found the employer guilty of manipulating the Government-assisted subsidy to a driver, convincing the 70-year-old pensioner to return significant portions of his $1500 fortnightly payment, in cash. 

A $14,000 penalty was handed down for two breaches of the Fair Work Act (one fined at $10,000 and the other at $4,000).   

JobKeeper: justifications vs realities 

The employer had previously justified his actions during the FWO investigation by claiming the JobKeeper fortnightly payment far exceeded the employee’s usual casual wage, and that the cashback amounts were redistributed in order to keep his business afloat. 

He also claimed that the employee entered the agreement voluntarily, was fully aware of the intentions behind it, and was “never made or forced to hand back any cash”. 

Redistribution, the employee was told, involved supporting other struggling staff members who were ineligible for JobKeeper – including a New Zealand citizen caring for two people, a worker with a husband who had lost his job and a cleaner on the autism spectrum facing financial struggles.

Such justifications were suspect to the FWO, as the employer refused to produce proof of any redistributed cash and is therefore said to have pocketed over $6,200 in the May-August period of 2020. 

Over the employee’s final payment period in early September 2020, the employer again breached the Fair Work Act by failing to transfer a single dollar into the employee’s account. 

Additionally, the employee was discovered to have had little comprehension of the arrangement, only raising an eyebrow when his honest JobKeeper declarations to Centrelink resulted in a slashed pension payment. 

The cash paid back to the employer, coupled with the pension cut, often left the employee with less than his pre-pandemic earnings. In one pay period, he was told to pay back his entire Jobkeeper payment, totalling $1470.00. Another saw him take home only four dollars for a week of work plus a reduced pension due to being asked to pay a portion of his payment back, the FWO decision notes.

“When you personally do something in breach of the law, particularly the Fair Work Act, you will be personally liable,” says Aaron Goonrey, Partner at Lander and Rogers. “Even if someone had done something in good faith and thought they were doing the right thing, ignorance of the law is no defence.”

However, ignorance is an unlikely defence in this case because “information in relation to JobKeeper payments was easily accessible via government websites,” says Goonrey. “They made it quite clear how someone should be paid.”

Trust breached in a “most callous and despicable manner”

Abuse of JobKeeper had been on our radar since the scheme was first announced in 2020. Detailed information that clarified how to properly follow the rules of the scheme was in abundance from the outset.   

While it is true that in this case, as it was for many workers, the employee was awarded with more than his pre-pandemic wage, the employer did not have “licence to redistribute the money as he saw fit”, the FWO concluded.  

Not only that, but the employer was found to have deliberately misrepresented the scheme to his employee with false statements about both supporting the other employees and paying ongoing business costs (such as bus repairs and registration). 

“Even if someone had done something in good faith and thought they were doing the right thing, ignorance of the law is no defence.” – Aaron Goonrey, Partner, Lander and Rogers

Judge Salvatore Vasta went further to say that the employer “took advantage of the ignorance of the employee” and that trust had been breached “in a most callous and despicable manner”. 

He also stated that it would have been “extremely simple” for the employer to provide proof of his justifications, if they were true. 

Despite the impassioned language of the ruling, the employer’s “cooperation” contributed to the maximum penalty being reduced from $26,640 to $14,000. 

This cooperation included returning all cashback amounts upon receiving the contravention letter on behalf of the employee, to a total of $6270.40. However, the employer offered no apology for his “reprehensible” behaviour, according to the FWO decision.

A microcosm of a larger ongoing issue 

While the JobKeeper Payment scheme is in the past, Judge Vasta cited “deterrence” as a major factor in deciding the penalty. Whether or not this judgment serves its intended purpose remains to be seen.  

What the employer’s actions speak to, though, are the persistent problems of wage theft and exploitation of vulnerable workers in Australia. 

Across many industries, businesses of all sizes regularly advertise positions below Award rates. In 2020, the conclusion of a two-year nationwide audit of 1217 businesses traversing retail, manufacturing, hospitality and construction recovered over $1.3 million in underpaid wages. 

According to the audit, the least compliant industry was hospitality (cafes, restaurants and fast food), with 61 per cent failing to adhere to basic workplace rights. 

Similarly, migrant and traveller worker abuse has the potential to ramp up again as international workers return to Australia. A 2017 study found almost a third of 4322 migrant workers surveyed were earning half the minimum wage. 

Goonrey stressed that “it’s always a good time to talk about underpayments and compliance with workplace laws, because clearly companies are not getting it right”. 

With the pandemic restrictions easing and the workforce returning to some version of business as usual, Goonrey warned that “we’re going back to 2019, when this was a persistent issue for many organisations”. 

In 2019, research revealed that one in five Australians were underpaid. They were also incorrectly paid on an average of three times per year. These statistics suggest that underpayment is costing employees roughly $1.8 billion per year. 

The question remains: why is underpayment such an ongoing, yet overlooked issue, especially when it is so often exposed?

Payroll non-compliance is a complex problem. As Goonrey says “the system is not easy” but adequately “training your payroll professionals” would be a good place to start. 

Image does not depict the worker or employer in this case.

Make sure you and your team are across your legal obligations to staff. AHRI’s HR Legal short course is designed to equip you with the
need-to-know information. Sign up to the next course on 22 March.