Cafe threatens to go into liquidation if Ombudsman takes legal action over $22,000 underpayment

The owner of a Sydney cafe has allegedly threatened to put his business into liquidation if the Fair Work Ombudsman proceeds with legal action over underpayment allegations made by a former worker.

The owner operator of Wild Sage Cafe in Cammeray, Arthur Antonopoulos, and his company Blue Hornsby Pty Ltd, are facing Federal Court proceedings for failing to reimburse a former pastry chef who was allegedly underpaid $22,329 between November 2012 and May last year.

The former chef, an international student from India who was on a 457 working visa at the time, raised her concerns with the Ombudsman after her employment at the cafe ended.

Following an investigation into the allegations, Antonopoulos allegedly told inspectors he would put his company into liquidation should legal action concerning the underpayments take place.

Fair Work Ombudsman (FWO) Natalie James said the inspectors attempted to resolve the matter but the owner and company had not co-operated, and are now facing a maximum penalty of $5100 and $25,500 respectively.

“We prefer to assist employers to rectify inadvertent non-compliance issues, but we are prepared to take legal action against employers who refuse to co-operate,” James said.

Will Snow, senior associate at law firm Finlaysons, told SmartCompany this morning the case contains important lessons for business owners and their companies when it comes to underpayment claims.

“It’s critical for businesses to understand not only if the entity is in the firing line but if the individual involved is in contravention of the act,” he says.

Snow says penalties for breaches of employment awards have recently increased to more than $10,800 for individuals or more than $50,000 for companies, and in this case, he believes the issue of underpayment could have been resolved at an earlier stage.

“If in this case they failed to comply at early stage, it increases the likelihood the FWO are going to prosecute you,” he says.

 “If you’re a HR manager and you have knowledge you have been underpaying staff, you’re potentially facing over $10,000 as an individual.”

Snow also says threatening liquidation won’t necessarily protect an owner or company from liability.

 “There is potential for a liquidator to investigate the transactions of a company director intended to defraud employees and other creditors,” he says.

“You can’t just disappear and say we’ve got no money and no assets, the court can unpick those arrangements.”

However, Snow says it might mean the former employee will not be paid back the money owed.

“Orders, judgements and legal orders are only as good as the person who has the ability to pay,” he says.

“Unfortunately the thing is this person might not get their money back because the business might not have anything.”

Snow says the main lesson for SMEs from the case is to heed the warning that individuals involved in a business can be personally liable for underpayments.

“This case really says for employers, if there is an individual in charge of a business who is involved in these issues, there’s potential for them to be personally liable,” he says.

Snow says the Fair Work Ombudsman is paying particular attention to how international workers are being treated by Australian companies.

“The right pay for employees is a fundamental entitlement the Ombudsman is rigorously pursuing on behalf of underpaid employees, especially those working under visa arrangements,” he says.

“There’s been a recent focus on the pay conditions of employees under visa arrangements, businesses should review where it has employees under visa arrangements and how they’re being paid.”

SmartCompany contacted Arthur Antonopoulos and Blue Hornsby but did not receive a response prior to publication.