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Former transport operator underpaid drivers $143,000

June 16, 2016

A former transport operator has been penalised $41,208 in the Federal Circuit Court for deliberately underpaying 12 casual truck drivers more than $143,000 over three years.

Judge Justin Smith imposed the penalty against NSW North Coast man Sumerdeep Singh, including a 90% maximum penalty for record-keeping contraventions.

Mr Singh’s former company, Sumer Bagri Pty Ltd, had delivered groceries for Woolworths in the local area that were ordered online under a contract it had with Linfox Australia Pty Ltd, which had been contracted by Woolworths Ltd.

The Court found that the contract price paid by Woolworths to Linfox and the sub-contract price paid by Linfox to Sumer Bagri was well above the amount needed for Mr Singh to pay minimum employee entitlements to the truck drivers.

The Fair Work Ombudsman, who first investigated the underpayments claim by one of the drivers, said that parties higher up in the supply chain should keep a check on other parties to ensure they’re doing the right thing. But is it a breach of your Chain of Responsibility if drivers are being underpaid illegally? Is a road safety issue? Low rates of pay for drivers have been blamed by some organisations for road safety incidents. Is this any different?

The investigation

The situation came to light after one of the drivers complained to the Fair Work Ombudsman (FWO) who, during an investigation, found 12 employees had been short-changed a total of $143,600 over three years.

The Court viewed as significant, that Mr Singh, himself a former delivery driver, admitted to using $45,000 from the company’s accounts for a deposit on a house while acknowledging that his drivers were being underpaid.

Adding to his crimes, the Court was told that Mr Singh had manipulated his employee records to try to cover-up the underpayments … his records even showed he was driving at a time he was actually in India.

Judge Smith found that Mr Singh’s contraventions were serious and deliberate and ordered him to pay the penalty to the truck drivers to partially compensate them for their underpayments, which unfortunately could not be fully paid before the company went into liquidation.

What the FWO said about the supply chain

In commenting after the Court findings, Acting Fair Work Ombudsman Mark Scully said that while both Woolworths and Linfox had no involvement in the contraventions, better oversight of their supply chain may have avoided the significant underpayments.

“Businesses at the top of the supply chain should maintain a level of control and oversight that enables them to be confident that the workers at their worksites and in their supply chains are receiving their full lawful entitlements,” Mr Scully said.

“Outsourcing is a legitimate business arrangement – but in our experience, in highly competitive markets, it also increases the risk that workers will be underpaid, sometimes quite deliberately,” he said.

Mr Scully says the FWO is prepared to hold company directors to account for their actions in the event that companies are wound up.

Fair comment from the Fair Work Ombudsman?

Are the FWO’s comments fair that supply chain parties should ensure that drivers are being paid their rightful entitlements?

What do your contracts with transport companies say about driver payments? Is that a Chain of Responsibility obligation that you must fulfil?

The now disbanded Road Safety Remuneration Tribunal linked driver payments to safety, but it wanted the minimum rates for heavy vehicle contractor drivers raised. It wasn’t talking about criminal activity, such as deliberately taking advantage of drivers by underpaying them and falsifying records.

What do your contracts with transport companies say about driver payments? Should say anything at all? They should discourage the need for drivers to speed or drive while fatigued in order to meet your deadlines. What other obligations must you fulfil under the Chain of Responsibility?

Know where you stand in this regard and how to protect your business with expert advice contained in CoR Adviser. Written by transport lawyers at Holding Redlich, CoR Adviser takes you step-by-step through your legal obligations under the Heavy Vehicle National Law, explaining in detail what are – and, equally importantly what are not – your obligations under Chain of Responsibility.

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