The Fair Work Ombudsman has secured a total of $69,552 in penalties in court against the operator of a women's health clinic in Melbourne that withheld government-funded parental leave payments from an employee.
The Federal Circuit and Family Court has imposed a $58,590 penalty against The Pagoda Tree (Vic) Pty Ltd, which operates The Pagoda Tree clinic in Albert Park, and an additional $10,962 penalty against the company's sole director and owner, Natalie Jade Kringoudis.
The affected worker was employed as a Chinese Medicine Practitioner at the clinic when she took parental leave in 2018 and gave birth.
After the employee successfully applied for the Commonwealth Government's Paid Parental Leave scheme, the Department of Human Services (now known as Services Australia) transferred $12,948.30 to The Pagoda Tree company between December 2018 and January 2019.
Under the Paid Parental Leave Act, The Pagoda Tree was required to transfer the funds to the employee in a series of instalments finishing in March 2019, but breached the Act by transferring less than half of the funds to the employee during her period of paid parental leave.
The company also breached the Fair Work Act by underpaying the employee a total of $10,296 in annual leave entitlements, casual loading and Saturday loadings between 2016 and 2019, and by contravening record-keeping laws.
Fair Work Ombudsman Sandra Parker said the significant penalties sent a message that the unlawful misuse of government payments by an employer was a serious matter.
"We are prepared to take enforcement action to protect the integrity of Commonwealth Government-funded schemes designed to assist parents," Ms Parker said.
"Paid Parental Leave funds are for the direct benefit of new parents, not employers, and we will act to ensure they are passed on in full as the law requires. Any workers with concerns should contact us."
Judge Alister McNab found that after the Department of Human Services transferred the parental leave funds to The Pagoda Tree, the funds were transferred to personal accounts of Ms Kringoudis and from there it appeared that funds were used to pay for daily living expenses, restaurant meals and alcohol.
Despite the affected employee telling Ms Kringoudis in April 2019 that her "savings are nearly gone" and she was "in a very bad situation", Judge Alister McNab found that Ms Kringoudis had been "fobbing off [the employee] over an extended period of time".
After the employee complained to the Department of Human Services, the matter was referred to the Fair Work Ombudsman for investigation. After the FWO contacted The Pagoda Tree, the company paid the outstanding parental leave funds to the employee in May 2020, more than a year after they were due. The company rectified the outstanding Fair Work Act underpayments by September 2020.
Judge McNab said: "I have little doubt that had the FWO not become involved and pursued the matter on behalf of the employee that she would not have been paid without going to the expense of issuing legal proceedings herself."
Judge McNab said it was important to impose a penalty that "makes plain the importance of compliance with minimum standards both under the PPL Act and the FW Act" and to "dissuade an employer from misusing taxpayer funded entitlements such as PLP".
"The fact that the Respondents have received funds which have been provided to them for the purposes of remitting to an employee to assist through maternity leave and then used those funds for their own purpose must be deplored," Judge McNab said.
"Any failure by an employer to transfer Parental Leave Payments to an employee essentially amounts to an employer improperly appropriating Commonwealth funds."
It is only the second time the Fair Work Ombudsman has secured penalties against an employer for failing to transfer Paid Parental Leave funds to an employee. The first matter was finalised in 2018.
