THE Fair Work Ombudsman has fined operators of a Sydney-based cleaning company $444,300 and backpay $223,244 for treating vulnerable employees as "slaves" under a "calculated" scheme.

Grouped Property Services Pty Ltd has been penalised $370,000 and its former owner Rosario Pucci was fined $74,300 for being "intimately involved" in the exploitation of 49 workers between 2011 and 2013.

The company was also ordered to back-pay $223,244 to the exploited workers.

Pucci previously was fined $4,400 in 2011 for his involvement in underpaying three employees with his old company, Wash and Go Pty Ltd.

Fair Work Ombudsman Natalie James says the case was one of the agency's most complex matters to date.

"This matter involved dubious 'labour hire' arrangements, corporate structures and sham contracting arrangements that were used by a second-time offender in a calculated attempt to avoid responsibility for vulnerable workers' entitlements," says James.

At the commencement of the 2014 litigation, the Ombudsman secured a freezing order to prevent the company from placing itself in liquidation.

The Federal Court found Grouped Property Services deliberately exploited 51 workers, many from non-English speaking backgrounds.

They were individually underpaid amounts ranging from $58 to $23,474 through a purported labour hire company called National Contractors which was registered at Grouped Property's address.

The Fair Work Ombudsman proved in court that Grouped Property Services was the true employer of the workers and that National Contractors was just a shell corporation created by Pucci to avoid paying employees the minimum wage.

Grouped Property Services required workers to obtain ABNs and submit invoices for payment and then paid workers arbitrarily determined low flat rates that undercut award minimums, and in some cases, paid nothing at all.

James welcomed the judgment from the Federal Court, and says it is a warning to those looking to exploit workers through dubious corporate structural scams.

"We are pleased that the court has seen through these structures and held the individuals responsible to account," says James.

Justice Anna Katzmann says the exploitation of the workers was "serious". Many were foreign nationals on temporary visas with limited English skills and were unfamiliar with Australian labour laws.

"Many, if not all, were struggling financially," says Katzmann.

"Several had been unemployed for some time before securing work for the company. Some were treated by Grouped Property Services as slaves."

Katzmann highlighted the fact that several employees were terminated for simply asking for payment of outstanding wages.

The court further found the conduct of Pucci and Grouped Property Services caused employees considerable emotional, mental, and financial hardship and anxiety.

"(One employee) was supporting her partner who was undergoing chemotherapy and when Grouped Property Services stopped paying her they struggled to survive," says Katzmann.

Justice Katzmann described Pucci's treatment of various workers as being "inexcusable", "disgraceful", "reprehensible" and "shameful".

Pucci even threatened to deport one Colombian student, and forcibly removed another international student from his office after they asked for outstanding wages, telling them to "kiss my a**".

In addition to penalties, the Ombudsman secured court orders requiring Grouped Property Services to commission a professional external audit of its payment practices and rectify any underpayments discovered.

Never miss a story: Sign up to Business News Australia's free news updates

Follow us on Twitter, Facebook, LinkedIn and Instagram

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Crypto staking: a new way to earn passive income
Partner Content
You may be familiar with traditional ways of earning passive income such as trading sto...

Related Stories

SelfWealth shareholders quash board overhaul attempt

SelfWealth shareholders quash board overhaul attempt

Shareholders in fast-growing online brokerage startup SelfWealth (A...

EVENT to hit divestment target once $75m Rydges North Sydney sale completes

EVENT to hit divestment target once $75m Rydges North Sydney sale completes

Entertainment and leisure services provider EVENT Hospitality &...

Takeover activity lifts a gear for Infomedia with a second $657m bid from Battery Ventures

Takeover activity lifts a gear for Infomedia with a second $657m bid from Battery Ventures

Auto industry software services group Infomedia (ASX: IFM) is mulli...

PEXA purchases 25 per cent stake in AI fintech company Elula

PEXA purchases 25 per cent stake in AI fintech company Elula

In a bid to bolster its fintech offering, online property exchange ...