In a recent decision the Fair Work Commission ordered the Republic of Italy to pay a penalty of $94,000, compensation of $6493, interest of $1074, and legal costs to an employed administration assistant for breaches of workplace law.

The case is a reminder of the importance of complying with workplace laws and responding quickly and effectively to concerns about non-compliance.

The Facts

Mr. Scarati was employed since December 2002 as an Administrative Assistant in the Republic’s consular offices in Perth and Melbourne.   He was employed under two written contracts, commencing in August 2002 for his engagement in Perth and more recently in February 2008 for Melbourne.

He claimed that his employment was covered by the Clerks – Private Sector Award 2010 (Clerks Award) as a level 3 employee.

He was not underpaid at that classification level but claimed he had never been paid annual leave loading at the rate of 17.5% in accordance with the Clerks Award.

He also claimed that, in breach of s. 535 Fair Work Act 2009, the Republic failed to maintain, for a period of seven years, employee records in English and failed to provide his employment records upon request.

He also sought declarations that:

  • The Republic was required to make employer superannuation contributions for his benefit in accordance with the Superannuation Guarantee Charge Act 1992.
  • He was entitled to long service leave benefits in accordance with Victorian long service leave legislation.

The Republic admitted that it is a National System Employer as defined in the Fair Work Act, and that Australian law applied.

The Republic disputed that the Clerks Award covered the position even though a previous decision also involving the Republic had already established that the Clerks Award can apply to the employment of a consular official by the Republic.

The Liability Decision

In a 2023 decision the Fair Work Commission ordered that the Republic was liable to Mr. Scarati for underpaid leave loading in breach of the Clerks Award.  The Commission also made declarations for superannuation and long service leave obligations favouring Mr. Scarati.

The Penalty Decision

In the recent 2024 decision the remaining issues of penalties and legal costs were also decided in Mr. Scarati’s favour.

Regarding the failure to pay annual leave loading, the Commission was concerned that:

  • the contravention occurred over a six-year period;
  • a letter of demand before commencement of the proceeding did not result in the making of the payments;
  • no offer was made to simply pay the unpaid entitlements, even after the proceeding was commenced;
  • the breach had not been remedied by the time of the penalty hearing;
  • no apology had been provided to Mr. Scarati and there was no evidence of contrition and remorse.
  • the defence of the proceeding indicated a culture within the Republic that compliance with the requirements of Australian employment law is not a matter which is taken seriously.

The Commission saw a need to issue a penalty to deter future conduct and issued a penalty of $69,000 for the annual leave loading contraventions.

The Commission also ordered penalties of $15,000 for a 15-month delay in producing employment records after Mr. Scarati’s request, and $10,000 for failing to maintain the records in English.

The Commission ordered that the penalties should be paid to Mr. Scarati personally.

The Commission also ordered that the Republic should pay 70% of Mr. Scarati’s costs in view of “a deliberate pattern of conduct engaged in by the Republic in clear defiance of the statutory imperative…”

Implications

Employers that fail to respond quickly and well to genuine claims of breaches of workplace law will run a risk of stiff deterrence penalties.

 

*Scarati v Republic of Italy (No 3) [2024] FCA 55.

**Scarati v Republic of Italy [2023] FCA 1264.

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