Being a small business is “no excuse”: Judge fines gym $47,000 for ignoring a $2200 Fair Work Commission order

The Federal Circuit Court has fined a Melbourne business and its former director a total of $47,608 for ignoring a Fair Work Commission order to pay $2200 compensation for unfairly dismissing an employee.

On January 17, Fair Work Commissioner Tim Lee ruled World Gym Sunshine had 14 days to pay $2200 compensation plus interest to a then 23-year-old receptionist, Samaka Sophia Ndege.

Despite the order, Ndege contacted Fair Work claiming she had not been paid her compensation by the gym, which is located in the suburb of Sunshine in Melbourne’s west.

Following the complaint, the Fair Work Ombudsman issued several notices to the business requesting it to comply with the order, which were ignored.

As a result, World Gym Sunshine as well as its former sole director and part-owner, Wayne George Mailing, were taken to court by the Fair Work Ombudsman last month.

In a landmark decision, Judge John O’Sullivan ordered World Gym Sunshine to pay a $41,182.50 fine, while Mailing was ordered to pay a further $6426 in penalties.

In his ruling, Judge O’Sullivan said “this was a small business, however, that is no excuse”.

“There is no evidence that the failure to comply with the FWC orders is not deliberate. Everything points to the likelihood that the first respondent until the commencement of these proceedings has wilfully ignored them,” O’Sullivan said.

While World Gym Sunshine told SmartCompany Mailing has sold the business and its current ownership has “nothing to do with him”, there is evidence Ndege’s case was not an isolated incident.

Sarah McKeon, a university student who was employed at the gym at the time of the sale, told SmartCompany she pulled out of a case similar to Ndege’s as she didn’t have the time and resources to pursue the matter further.

“[Mailing] sold the business without giving us notice, and then he just came in one day and said ‘the business is sold’. He didn’t give us our last pay – he just up and left – so the manager at the time had to hire a lawyer to chase him down,” McKeon says.

“I had $1500 in annual leave after working there for a year and a half. When I chased him down, he said because he owned 20% of the business, he only owed me 20%, but he never paid even that.”

“He said it was up to me if I wanted to take it further, and ‘what could I do about it – I was just a young girl’. He didn’t want to budge.”

McKeon also alleges Mailing misled the gym’s new owners about how much money it was making, which led them to put pressure on staff about why the gym was not performing as well as the previous owners claimed it had.

It is not the only legal dispute Mailing is currently facing. Small business owner Alex Blagojevic, who purchased a separate business called Workout Workshop from Mailing four years ago, told SmartCompany he is currently pursuing legal action against him over a disputed rental bond.

Blagojevic claims that from when he purchased the business until 12 months ago, he leased its premises directly through Mailing. At the end of the lease, Blagojevic alleges Mailing did not pay back his bond, claiming superficial damage to the property and a missing TV.

Despite numerous attempts, SmartCompany was unable to contact Mailing prior to publication.

In an official statement, acting Fair Work Ombudsman Mark Scully said the gym had showed little remorse for its actions in the case.

“They could have avoided this significant penalty by simply accepting the commission’s original ruling and paying this young employee the relatively small amount of compensation ordered,” Scully said

“Compliance with commission orders is fundamental for the integrity of the workplace relations system and employers should be aware that we are prepared to take action where appropriate to ensure they are enforced.”

M+K Lawyers partner Andrew Douglas told SmartCompany the case is unusual because most businesses obey Fair Work Commission rulings.

“We don’t see many decisions in the unfair dismissal arena going to court, simply because once people negotiate and agree on a settlement, most businesses comply with it,” Douglas says.

However, as a result of the extension of the Fair Work Commission’s jurisdiction into bullying, Douglas warns the ruling could have implications for bullying cases.

“If you look at the reasoning in this case, the penalty was for breaching a decision handed down by the Fair Work Commission. That was the main reason for the penalty, and it aligns with criminal law,” Douglas says.

“In the bullying arena, there are no orders for compensation, but the same penalty regime is in place.”

“You might get an order that says ‘John doesn’t work with Betty’. But in a business, on a particular day, you might decide that you need John and Betty to work on the same shift. You can see how difficult it will be to apply a ruling on all occasions.”

Douglas says that while there have only been a handful of cases in the bullying regime so far, business owners should be careful about how they deal with them.

“While most businesses comply in Fair Work cases, in bullying, the orders control what you do every day, so the potential for breach is much higher,” he says.

“Be careful in accepting any orders from a commissioner if you can’t live with every day.”