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Employer underpaying employees, spends night in jail

May 17, 2018

By Victoria Hansen and Lindsay Carroll, NRA Legal

Following a night in jail, a Northern Queensland employer who underpaid his staff has won a stay on a 12 month jail term which was imposed for defying a court order.

The Fair Work Ombudsman (FWO) who brought the case against the owner-operator of the business, stated that it was the first time it had initiated a contempt of court action and that this was also the first time a jail sentence had been imposed as a result of its legal action.


In 2014, the FWO pursued the employer for over $30,000 in underpayments to five backpackers. The employer told an inspector that he would never pay the money and that the backpackers “would not get a cent” in back pay.

In 2015, the employer’s company was penalised $55,000 for failing to comply with FWO notices to correct those underpayments and the employer was fined $12,000 for his involvement. Freezing orders were imposed on the employer and the company as it had been suggested by the FWO following its communications with the employer that he was prepared to ‘bankrupt’ his company to avoid paying the penalties and back-pay order.

ASIC then took action against the employer after he breached s1308 of the Corporations Act by providing a false or misleading statement to it. The employer had tried to deregister the company that had incurred the $55,000 penalty, claiming that the company had no outstanding liabilities.

Contempt of court

The FWO commenced legal action in 2017 alleging the employer committed the offence of contempt of court in 2015. It was found that he contravened the freezing order against his company by transferring more than $40,000 from two frozen accounts into his family trust account.

The court ordered that the employer be sentenced to a period of imprisonment for 12 months and fined him almost $85,000 to be paid to the FWO. It was ordered that his jail term be suspended after he had spent 10 days in jail on the condition that the fine was paid.

Stay of the orders

An urgent stay of the orders was sought by the employer and an appeal against his conviction and sentence was lodged. The FWO agreed to the stay on conditions and on 11 May 2018, the Federal Court ordered that the employer’s sentence be stayed and he be released from jail on conditions, pending the outcome of his appeal.

A court date has not yet been set for the appeal hearing.

Further information

Underpayment of wages is a serious issue and can become much more serious for employers who do not comply with notices or orders; for more information, please call NRA on 1800 RETAIL (738 245) and ask to speak to one of our workplace advisors.

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