Unlawful Deductions from Workers
The Fair Work Ombudsman (FWO) has initiated legal proceedings against Queensland-based McCrystal Agricultural Services Pty Ltd and its director for allegedly making unlawful deductions from the wages of migrant workers employed on their sweet potato farm. This case raises significant questions about compliance with the Fair Work Act, particularly when dealing with visa workers under the Pacific Australia Labour Mobility (PALM) scheme.
Alleged Unlawful Deductions
According to the FWO, between August 2021 and March 2022, McCrystal Agricultural Services deducted $18,331 from the wages of 66 employees in ways that breached the Fair Work Act. Key allegations include:
Alcohol Policy Fines
Workers staying in on-site accommodation were fined $500 per breach of the company’s alcohol policy. Over three months, 29 employees were fined a total of $14,500.
Excessive Health Insurance Deductions
The company is accused of deducting more than the required amount for health insurance premiums, withholding $1,282.50 from 27 full-time employees.
Unauthorised Overtime Recovery
Following an overpayment of casual staff for overtime in August 2021, the company allegedly recovered $2,548.60 by deducting the amount from future wages without obtaining employee consent.
As a result of these deductions, some employees—primarily from Vanuatu and engaged in tasks such as sweet potato planting, packing, and general farm duties—were left with net pay as low as $150 in certain weeks.
“It is crucial all businesses ensure wage deductions are lawful, beneficial to employees, and transparent to maintain compliance, build trust, and protect their reputation.”
Legal Compliance and Penalties
Under the Fair Work Act 2009, wage deductions are permitted only if they are lawful and benefit the employee. The FWO contends that McCrystal Agricultural Services failed to meet these criteria. A directions hearing is scheduled in the Federal Circuit and Family Court for 3 February 2025. The potential penalties are significant: the company could face fines of up to $66,600 per contravention, while its director, Mr. McCrystal, may be fined up to $13,320 personally.
Rectification and Lessons for Employers
Since the FWO investigation, McCrystal Agricultural Services has corrected the underpayments and removed the alcohol fines from its policy. However, the case serves as a critical reminder for all employers, particularly those employing vulnerable migrant workers, to prioritise payroll compliance and ensure all wage deductions are lawful.
It is crucial all businesses ensure that:
They understand the Fair Work Act’s requirements around wage deductions.
Clear, written consent is obtained from employees before making any deductions.
Deductions are primarily for the employee’s benefit and do not unfairly disadvantage them.
Failure to comply with these obligations can result in severe financial penalties, reputational damage, and a loss of employee trust.
Conclusion
The FWO’s action against McCrystal Agricultural Services underscores the importance of lawful and fair treatment of employees. For businesses, particularly those employing workers under schemes like PALM, this case highlights the necessity of robust payroll practices and adherence to workplace laws. By ensuring compliance, employers not only avoid legal repercussions but also contribute to a fair and ethical work environment.