Massage shop operators have been penalised $118,000 for docking workers’ pay for purported misdemeanours including “lacking passion”, amid warnings of widespread wage fraud in the sector.
The Fair Work ombudsman successfully prosecuted Lu’s Healthcare, which operates massage shops in Melbourne’s CBD and Richmond, for underpaying two workers a total of $54,000.
Lu’s Healthcare arbitrarily docked its workers’ take-home pay for breaches of its code of conduct. Fines included $100 for being late to work or absent without notice; $50 for “a lack of passion or good hospitality”; $20 for “noisemaking and playing around” or lying on massage tables.
The code said massage therapists could be sacked for talking on the phone during a massage. It said that punishment for “resistance to hard work” was being “put back into apprenticeship again”.
It also stated that “employees with other problems will undergo serious punishment”.
The Fair Work ombudsman said a male massage therapist in his 20s was short-changed $33,000, or 44% of his owed wages. A 19-year-old female therapist with limited English was underpaid $21,000, or 38% of her owed wages.
Workers were paid a percentage of each massage performed, instead of the minimum wage under the health professionals and support services award. “The workers also had money unlawfully deducted from their wages,” the ombudsman said.
The Fair Work ombudsman, Natalie James, said her office has received intelligence that the business model identified at Lu’s Healthcare is relatively common across massage businesses.
Employees, in many cases international students or overseas workers in Australia on the 417 backpacker working-holiday visa, are typically paid 50% of the cost of the massage, with no pay for periods they spend at the business without clients.
The ombudsman has been auditing massage parlours around Australia since 2009. It has found underpayment of wages, nonpayment of wages, failure by employers to issue payslips or keep proper employment records and possible sham contracting arrangements.
Lu’s Healthcare admitted failing to pay correct rates. It repaid the workers $54,000 in December 2014, after the ombudsman prosecuted it and 18 months after the underpayments occurred.
Federal circuit court judge John O’Sullivan said the underpayments were not inadvertent, but part of a “conscious business strategy”.
The judge penalised Lu’s Healthcare $112,860 and director Kun Wang a further $5,940.
James said the court penalties should serve as yet another reminder to employers who flout their workplace obligations that there will be financial penalties if they are caught.