Hairdressers fighting Fair Work Ombudsman agree to settle and retract claims FWO destroying business

The operators of Melbourne hairdressing salons have ended their legal battle with the Fair Work Ombudsman after promising to comply with workplace laws in future, allowing independent audits for two years and retracting claims made about the FWO.

Hennesy Lane Design and the company’s director, Craig Lane, and Gas Hair Studio and its directors, Lane and Anne-Marie Drummond, have signed enforceable undertakings as an alternative to the Ombudsman pursuing legal action against them.

SmartCompany last month reported Lane’s anger at being “named and shamed” in a press release announcing Lane and Drummond’s prosecution for underpaying apprentices that hit the media before the case against Lane even went to court.

At the time, the hairdresser told SmartCompany that the Ombudsman “publicly destroyed my business”, after a press release was picked up by four local newspapers and radio stations 3AW, Fox FM and Triple M.

“The FWO should work for the employer and employee; they’re not a watchdog, they are a killer,” Lane said.

“They go out and destroy businesses bit by bit.”

Hennesy Lane admitted to underpaying two former staff members $4,723.94 and $4,486.96 respectively, while Gas Hair Studio admitted underpaying one of the same employees $3,181.21. The companies rectified the underpayments in April.

However, the FWO still initiated legal proceedings on the basis that it had received a total of 12 complaints against both companies since 1999.

The Ombudsman decided to discontinue legal proceedings after Gas Hair Studio, Hennesy Lane, Lane and Drummond admitted contravening workplace laws and agreed to sign enforceable undertakings, committing to a number of specific actions.

This includes Hennesy Lane and Lane “unreservedly withdraw any and all statements to the effect that the motives of the Fair Work Ombudsman in commencing civil proceedings against them included, or were, an intention to destroy or harm their business and will refrain from making any further claims to this effect”.

The businesses must engage, at their own expense, an accounting professional within the next two months to audit the businesses to ensure their compliance with workplace laws, particularly relating to the pay and conditions of their employees.

The audits must satisfy the Fair Work Ombudsman that employees are correctly classified, paid their correct wage rates and entitlements, paid for all hours worked, including any time spent at training following a request or direction by the employer and receiving their appropriate allowances, overtime, penalty rates and other entitlements.

In addition, Hennesy Lane and Gas Hair Studio must apologise to the staff who were underpaid and place a public notice explaining the contraventions and corrective action both in their salons and in The Australian newspaper.

Hennesy Lane and Gas Hair Studio have also agreed to ensure workplace relations compliance training for any and all staff who have any managerial, human resource, recruitment or payroll function.

Without the settlement the case was scheduled for a court hearing this month where Lane and Drummond faced maximum penalties of up to $6,600 per breach and the salon faced maximum penalties of up to $33,000 per breach.

Andrew Douglas, partner at M&K Lawyers told SmartCompany, the lesson from this case is not to shoot your mouth off about the FWO.

“I don’t think their public commentary has done them any favours,” he says.

“There is no doubt the regulator is constantly looking to use enforceable undertaking rather than going to court as it helps their naming and shaming approach.

“The advice is not to fight it too hard, and immediately go to the FWO is a very good strategy.”

SmartCompany contacted Lane and Drummond for comment but both were unavailable.