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The Fair Work Ombudsman has secured $264,690 in penalties against a former Sydney entrepreneur, his wife and three companies he operated in response to employees being underpaid more than $1 million.

The Federal Circuit Court has today imposed $62,730 in penalties against Kia Silverbrook and additional penalties against three companies he operated.

IT company Mpowa Pty Limited has been penalised $96,900, solar cell research company Superlattice Solar Pty Ltd has been penalised $40,800 and Priority Matters Pty Ltd, which processed patent applications, has been penalised $51,000.

Janette Lee, who was a director of a company formerly operated by Mr Silverbrook, has also been penalised $13,260 for her role in some of the contraventions.

Backpay plus interest

During the course of the legal actions, commenced in 2013 and 2014, the Fair Work Ombudsman secured $1.15 million (plus interest) in Court-ordered back-payments, which have been made by Mpowa, Superlattice Solar and Priority Matters to 33 underpaid employees.

Penalties and back-pay orders could not be obtained against two other companies formerly operated by Mr Silverbrook, Geneasys Pty Ltd and Silverbrook Research Pty Ltd, – in response to more than $550,000 in underpayments of a further 10 employees – because the companies have been placed into liquidation.

The Fair Work Ombudsman investigation

The Fair Work Ombudsman investigated after receiving underpayment allegations from employees.

The underpayments were primarily the result of employees not being paid wages for periods of up to 10 months in 2013. Individual employee underpayments ranged from $436 to $214,483.

Comments from the FWO

Fair Work Ombudsman Sandra Parker welcomed the court’s penalties.

“Being paid for work performed is a fundamental workplace right and it is completely unlawful for employers not to pay their employees,” Ms Parker said.

“The Court’s penalty should warn all employers that they can face serious financial consequences for breaking workplace laws. Any employees with concerns about their wages should contact us.”

Underpaid employees included engineers, scientists, patent attorneys, patent assistants, patent design assistants, IT professionals and clerical workers.

Court findings

The Court found that Mr Silverbrook and the companies told staff it did not have sufficient funds to pay wages but encouraged them to continue working without pay for many months by repeatedly assuring them funding would be secured and pay would be shortly forthcoming.

Significant financial problems, stress and anxiety

Employees gave evidence that the non-payment of wages caused them significant financial problems, stress and anxiety.

Employees described the impacts on them of being exploited, including having to delay important life decisions such as starting a family, deferring health procedures and inability to sleep.

The judge sends a message

Judge Rolf Driver said:

“A clear message needs to be sent to the public that employees’ entitlements are not negotiable regardless of insolvency or nearing insolvency of the company.”

“It is important to set a meaningful penalty which will deter other employers who find themselves in difficult financial circumstances from requiring employees to continue to attend work and perform work in the hope of improving the employer’s financial position so that funds will become available to pay the employees,”