01 November 2013FWBC alleges multiple breaches of workplace law by NSW company

Backgrounder

Director of Fair Work Building Industry Inspectorate v Foxville Projects Group Pty Ltd, George Lu & Yun Yan

Allegations as outlined in Fair Work Building & Construction’s (FWBC) statement of claim, these may vary over the course of the proceeding.

Background

  1. Foxville Projects Group Pty Ltd (Foxville) was a subcontractor in the NSW construction industry which engaged workers on various sites including the Park Hyatt construction project and the State Theatre or Gowings project. George Lu and Yun Yan were the directors of the Foxville.

The 2008 Enterprise Agreement

  1. Under its 2008 enterprise agreement with the CFMEU, Foxville was required to pay its workforce:
  • time and a half for the first two hours on Saturdays and double time thereafter at a minimum of three hours;
  • double time on Sundays and double time and a half on public holidays for a minimum of four hours;
  • annual leave entitlements;
  • annual leave loading of 17.5 per cent;
  • superannuation;
  • fares allowance;
  • meal allowances for workers who completed overtime;
  • rostered days off (RDOs) accrual; and
  • a productivity allowance.
  1. The agreement also required monthly redundancy contributions to the Australian Construction Industry Redundancy Trust (ACIRT) and to pay superannuation to its workers. The agreement also specified a fare allowance be paid to each worker on working days and RDOs.

The 2011 Enterprise Agreement

  1. The 2011 enterprise agreement with the CFMEU retained the same entitlements as the 2008 agreement and also required Foxville to retain a ‘WorkCover Top-up’ and income protection policy for each of its employees. It was also required to make a weekly contribution to the Building Trades Group of Unions Drug and Alcohol/Safety Program.

Engagement of workers one, two and three

  1. In April 2007, Foxville engaged worker one as an independent contractor, under an Australian Business Number (ABN), even though his work was that of an employee. He worked 40-hours per week for Foxville at a flat rate, was directed by Foxville management and wore Foxville’s protective equipment. Worker one sometimes performed overtime, but was not paid for this work.
     
  2. Foxville paid worker one superannuation and made redundancy contributions for him.
     
  3. In early November 2011, Foxville’s project manager told worker one that Foxville would no longer engage workers on ABNs and they must decide if they wanted to be engaged as an incorporated company or become Foxville’s employees.
     
  4. On 24 January 2012, worker one had a telephone conversation with Mr Lu in which Mr Lu asked him for a decision and claimed he would be ‘better off as a company’. Worker one said he did not want to be engaged as an incorporated company and asked for a week’s leave.
     
  5. Foxville did not offer worker one any further work.
     
  6. In 2008, Foxville engaged worker two as an independent contractor until February 2012, under an Australian Business Number (ABN), even though his work was that of an employee. He worked 50-hours per week for Foxville at a flat rate, was directed by Foxville management, wore Foxville’s protective equipment and clothing and used their computers and equipment. He had a company car and Foxville paid his fuel costs, vehicle expenses and phone bills.  Worker two sometimes performed overtime and worked on public holidays, but was not paid for this work.
     
  7. Foxville paid worker two superannuation and made redundancy contributions for him.
     
  8. FWBC alleges that worker two was an employee of Foxville’s, not an independent contractor.
     
  9. Worker two worked as Foxville’s project manager on the Park Hyatt project in June 2011 and told worker three and other workers that they needed to become CFMEU members if they wanted to work on the project. Worker two told a colleague who complained that it was Foxville’s decision and the membership fees would come out of his salary.
     
  10. In February 2010, Foxville engaged worker three as an independent contractor until May 2012, under an Australian Business Number (ABN), even though his work was that of an employee. He worked 50-hours per week for Foxville at a flat rate, was directed by Foxville management and wore Foxville’s branded uniform. Worker three sometimes performed overtime, but was not paid for this.
     
  11. In April or May 2010, a Foxville foreman told worker three that he had to join the CFMEU to work on a site in Little Bay in NSW.
     
  12. By June 2011, Foxville allegedly had an established practice of engaging workers as independent contractors when they should have been classified as employees. Around this time, a CFMEU representative told Foxville that this practice was to be discouraged and it would not be able to work on large construction projects if it continued this practice.
     
  13. On 30 June 2011, Foxville received correspondence from the CFMEU indicating that it wanted to initiate a new enterprise agreement.
     
  14. In August 2011, Mr Yan told a meeting of the Foxville workforce engaged as contractors that everyone would be engaged under the EBA and would ‘go onto wages’ as a casual.
     
  15. The agreement was approved by a majority of workers on 8 September 2011.

Engagement of Caiman Employees

  1. In August 2011, Foxville entered into a labour-hire agreement with Caiman Pty Ltd (Caiman). Shortly afterwards, around 23 August 2011, it ceased to directly engage its workforce.
     
  2. From August 2011 to December 2011, Foxville engaged 95 workers under a labour-hire agreement with Caiman.
     
  3. Foxville management and supervisors directed the work of the Caiman employees, required them to fill out timesheets and made superannuation contributions for some workers. Foxville also gave the Caiman employees payslips.
     
  4. Foxville, and not Caiman, paid those employees from 4 November 2011 to 16 December 2011.
     
  5. Prior to its agreement with Foxville, Caiman had no experience in the labour-hire industry, had an issued capital of about $10, no real property or other registered assets, did not engage in or with any other business and did not make redundancy contributions for its employees.
     
  6. FWBC alleges that it was Foxville, and not Caiman, which was the true employer of those employees.

Engagement of BSI Employees

  1. In October to November 2011, an agent of BSI Manpower Pty Ltd (BSI) approached Foxville and offered BSI’s services to replace Caiman to look after the payment of wages and administration of the workforce. Foxville entered into an agreement with BSI.
     
  2. Caiman ceased to engage the Caiman employees around October 2011.
     
  3. From October 2011 until at least May 2012, BSI employed 85 workers for the purpose of supplying their labour to Foxville.
     
  4. BSI did not engage any other workforce except for the employees who worked on Foxville sites and the sole director of BSI did not perform any duties with regards to the administration of the workforce. Mr Yan continued to source and recruit workers and managed them.
     
  5. The BSI employees worked under the direction of Foxville’s management and supervisors and completed timesheets for Foxville. Foxville supplied payslips and superannuation contributions for the BSI employees.
     
  6. Prior to its agreement with Foxville, BSI had no experience in the labour-hire industry, had an issued capital of about $2, no real property or other registered assets, did not engage in or with any other business and did not make redundancy or superannuation contributions for its employees.
     
  7. FWBC alleges that it was Foxville, and not BSI, which was the true employer of those employees.

Alleged Contraventions

  1. FWBC alleges that Foxville, Mr Lu and Mr Yan contravened:
  • s318 of the Workplace Relations Act 1996 (WR Act) by failing to credit and accrue annual leave for workers one and two; and by failing to credit and accrue personal leave for workers one and two;
  • s44 of the FW Act by failing to credit and accrue annual leave and personal leave for workers one, two and three and the Caiman and BSI “employees” a total of 180 workers;
  • s50 of the FW Act by failing to comply with the 2008 enterprise agreement and
  • s50 of the FW Act by failing to comply with the 2011 enterprise agreement.
     
  1. FWBC alleges that in addition to, or alternatively to, the WR Act and FW Act contraventions outlined above, Foxville, Mr Lu and Mr Yan also contravened:
  • s342(1) of the Fair Work Act 2009 (FW Act) by taking adverse action against workers it had directly engaged prior to entering into the labour-hire agreements with Caiman and BSI;
  • s340(1) of the FW Act by terminating the employment of those workers because they exercised their workplace right;
  • s44 of the FW Act by failing to pay redundancy contributions, accrued annual leave, payment in lieu of notice and severance pay for the 95 Caiman employees;
  • s44 of the FW Act by failing to pay redundancy contributions, accrued annual leave, payment in lieu of notice and severance pay for the 85 BSI employees and
  • s44 of the FW Act by failing to provide all the workers with a Fair Work Information Statement as required under the National Employment Standards.
     
  1. FWBC alleges that, on two occasions, Foxville contravened s346(a), 348 and 349 of the FW Act by threatening to terminate the employment of workers if they didn’t become members of the CFMEU, coercing workers to become members of the CFMEU and making false and misleading statements about the workers’ obligation to join the CFMEU.
     
  2. FWBC alleges that Foxville contravened s535 of the FW Act by failing to keep adequate employment records.
     
  3. FWBC alleges that Foxville contravened s358 of the FW Act by threatening to terminate the employment of worker one for an unlawful reason.
     
  4. FWBC alleges that Foxville and Mr Yan contravened s345(1) of the FW Act by making a false and misleading statement to worker two about his redundancy entitlements.
     
  5. FWBC is also seeking compensation for unpaid wages and entitlements for all the workers.

Civil Litigation Proceedings

  1. FWBC filed proceedings in the Federal Circuit Court at Sydney on 31 October 2013.
     
  2. A directions hearing is scheduled for 3 December, 2013.
     

Maximum penalties

  1. The maximum applicable penalty for a contravention of the FW Act in this matter is $6,600 for an individual and $33,000 for a body corporate.
PDF icon Backgrounder - FWBC v Lu & yan.pdf