FWO wins the fight: Martial arts centre owner fined for paying trainees 73 cents

The owner of a martial arts and fitness centre has been fined a total of $45,936 for underpaying staff and trainees, with some paid as little as 73 cents per hour.

David Auty, owner of Revolution Martial Arts in the Melbourne suburb of Boronia, has been fined $7,656 by the Fair Work Ombudsman, while his company has been ordered to pay a further $38,280.

Federal Magistrate Frank Turner ordered Auty become personally liable if the company fails to pay the fine within 30 days.

Twelve trainees and five staff at the fitness centre were underpaid between July 2009 and April 2012 a total of $67,320.

The trainees were paid between $0.73 cents and $2.74 an hour, despite being entitled to between $8 and $16 an hour, after Auty made unauthorised deductions from their wages for costs such as club membership and administration fees. Some employees were also not paid annual leave entitlements.

The underpayments were revealed following an investigation by the Fair Work Ombudsman into a complaint lodged by an employee.

Auty has since repaid his staff, but not until after legal proceedings were commenced.

In 2006, Auty was advised by the Office of Workplace Services, a predecessor of the FWO about minimum entitlements and restrictions on making deductions from employees’ wages.

SmartCompany contacted Revolution Martial Arts but it failed to respond prior to publication.

The incident in 2006 did not reach the courts and this underpayment case was considered by Turner as the first time Auty had breached workplace laws.

M+K Lawyers partner Andrew Douglas told SmartCompany because there was no doubt Auty was aware of the workplace laws regarding minimum entitlements, this would have increased the amount he was fined.

“Considering they did not act on the advice of the FWO until legal proceedings were in place, I think these fines would be on the higher end and reflect this disregard for the law,” he says.

Douglas says if employers act on FWO orders quickly, they will most likely avoid legal proceedings.

“From time to time the FWO will intervene and notify people of their failures. So in this case, employers should seek advice and repay the money because if they do this they will most likely avoid prosecution.

“If you make full admissions quickly and respond to what needs to be repaid, the chances of prosecution is very limited,” he says.

The largest individual underpayment was $12,349 of a teenage male trainee and workplace laws relating to employment records were also breached.

Douglas says the case could herald a new focus for the FWO on the sports industry.

“In every sporting club there are people involved providing services for free – junior coaches, people running the food store – when does it cross over from volunteer to paid status?

“People are going to push back and just make employees work as volunteers,” he says.