• 1 [2017] FCCA 2299.

2The FWO was quite active in this area initially but then it shifted its focus to other breaches of the FW Act. Recently it successfully litigated a claim of discrimination on the basis of race and national extraction, which was also the first successful racial discrimination claim brought under the FW Act. In Fair Work Ombudsman v Yenida Pty Ltd (‘Yenida’1) the court found that a hotel had discriminated against two overseas workers by paying them less and treating less favourably than the Australian employees. This note compares the enforcement of workplace discrimination claims in anti-discrimination law with industrial relations law and shows that having a statutory agency with a range of powers available to enforce the law has the potential to change the landscape of workplace discrimination in Australia. The final part examines the Yenida case.

• 2 See further N. Rees, S. Rice, D. Allen, Australian Anti-Discrimination and Equal Opportunity Law (T (...)
• 3 Equal Opportunity Act 2010 (Vic) Part 8.
• 4 See further D. Allen, “Behind the Conciliation Doors: Settling Discrimination Complaints in Victori (...)

3The federal government passed Australia’s first anti-discrimination law, the Racial Discrimination Act (Cth), in 1975. Shortly after, the states and territories began enacting laws prohibiting sex discrimination. Other attributes followed. Workplace discrimination is now prohibited on the basis of a range of attributes across the country.2 The laws are very similar, particularly in how they are enforced. They rely on the individual who has experienced discrimination to lodge a claim at the equal opportunity agency in their jurisdiction or at the federal Australian Human Rights Commission. There is no right to access court directly except in Victoria.3 Provided the claim has substance and is within the agency’s jurisdiction, it will attempt to resolve it using alternative dispute resolution (‘ADR’), which is a confidential process. Most claims are settled or withdrawn. Few proceed to hearing at a civil tribunal or, for federal claims, at the federal courts. If they reach court, claims are subject to ADR a second time and many will settle. The courts hear very few claims each year. The reasons for this include the financial, psychological and emotional costs of litigation, the employee is satisfied with the settlement, and the time lapse between the discriminatory event and the anticipated court hearing date. Another factor influencing settlement is that damages awards in discrimination claims have tended to be low.4

• 5 Section 342.
• 6 FW Act s 351.
• 7 FW Act s 361.

6Section 351 of the FW Act prohibits an employer from taking ‘adverse action’ against an employee because of an attribute that they possess such as their race, sex, age or disability. The unlawful behaviour, the ‘adverse action’, is defined as dismissing the employee, injuring the employee in their employment, altering the employee’s position to their prejudice, and discriminating against the employee. Threatening or organising such action is prohibited.5 Both employees and prospective employees are protected.6 Once there has been allegation that s 351 has been breached, the onus of proof shifts to the employer to rebut the presumption.7

• 8 Section 539.
• 9 FW Act s 715.
• 10 Enforceable Undertaking Shawna Pty Ltd (29 January 2013) available at https://www.fairwork.gov.au/A (...)
• 11 FW Act ss 539 Item 11, 546.

7The FW Act does not rely on an individual for enforcement. Unions can bring claims on behalf of their members. Most significantly, the federal statutory agency, the FWO, has the power to investigate breaches of the Act and enforce compliance.8 Fair Work Inspectors can conduct an investigation into an alleged breach and if they reasonably believe the Act has been contravened, the FWO may accept enforceable undertakings from the employer.9 For example, a retailer agreed to complete training, place a notice about its unlawful conduct in a newspaper and display it in its workplace after an investigation revealed it had discriminated against a pregnant employee by reducing her working hours and giving new employees work in preference to her. The employer also agreed to compensate the employee and issue her with a written apology.10 If the employer is not willing to comply voluntarily, the FWO can litigate and seek compensation for the affected employee and a civil penalty of up to 60 penalty units per breach for individuals (currently AUD$12,600) and five times that amount for a body corporate.11

• 12 FWO, Annual Report 2016-17, (2017) 18-19.
• 13 Ibid 20-21. See also Michael Bailey, ‘Fair Work Ombudsman wins first racial discrimination case’, A (...)
• 14 The FWO alleged that the hotel underpaid 15 employees and failed to maintain records, which the emp (...)

8The Yenida case brought together two of the FWO’s current priority areas for compliance activities – migrant workers and the hospitality industry. The FWO has found its caseload is overrepresented by visa holders and that many are young hospitality workers.12 The hospitality industry accounts for almost one third of the FWO’s litigation work, despite hospitality workers constituting a very small part of the Australian labour market.13 Audits of businesses operating in this industry have often led the FWO to take action to recoup unpaid wages. Indeed, underpayments were one aspect of the Yenida case14 but it was how the employer treated two foreign workers in comparison to its Australian employees that were in dispute.

• 15 Hodkinson v Commonwealth (2011) 248 FLR 409.
• 16 Yenida [219].
• 17 Yenida [243].

11‘Discriminates’ is not defined in the FW Act. It has been held to mean to treat less favourably.15 In Yenida Baker J found that the employer treated Mr Loh less favourably when it failed to pay him penalty rates and did not require him to record his working hours on a timesheet,16 and that it discriminated against Ms Low by paying her a fixed weekly wage that did not vary according to the number of hours she worked.17

• 18 Yenida [248]-[261].
• 19 Yenida [328].

12Neither ‘race’ or ‘national extraction’ are defined in the FW Act. Baker J adopted the ordinary meaning of both as set out in the dictionary18 and found that the couple’s race was Chinese and their national extraction was Malaysian. Mr Chang was unable to show that the couple’s race and/or national extraction were not a substantial and operative reason why he treated them less favourably. Baker J found that he recruited Mr Loh because he knew it was likely that a Malaysian would accept working six days a week because that is common in Malaysia.19

• 20 Fair Work Ombudsman v Yenida Pty Ltd [2018] FCCA 1342, [104]-[111].
• 21 Ibid. [126].
• 22 Yenida [6], [11], [15].

13Not only did Baker J find that the employer acted unlawfully, she found that Mr Chang was involved in all of the contraventions. Mr Chang had sold the hotel by the time the case was heard because it was not very profitable. When the penalties decision was heard in early 2018, Mr Chang said he had had to borrow money to repay his former employees’ wages and claimed he had no capacity to pay any penalties.20 However, in determining the appropriate penalty, Baker J said more weight was to be given to deterrence than to the employer’s capacity to pay.21 Her Honour imposed penalties on both Yenida and Mr Chang in respect of the breaches of s 351. While those amounts were quite small, penalties were also imposed in respect of most of the other contraventions of the FW Act (namely, underpaying the other employees). Those penalties totalled $176,005 for Yenida and $35,099 for Mr Chang, in addition to $52,017.74 in unpaid wages.22

• 23 Fair Work Ombudsman v The Meatball And Wine Bar Pty Ltd [2018] FCCA 2288.

14As the FWO’s first foray into enforcing racial discrimination laws, there is no doubt that Yenida was a success. As the FWO’s the first discrimination case in three years, Yenida also brought the spotlight back to the issue, rather than leaving enforcement to individual employees. It is important for the FWO to maintain its profile in this area for two reasons. First, the body of case law about s 351 is underdeveloped, so it would be beneficial to all employees for the FWO to strategically pursue cases and develop the jurisprudence. Second, the FWO is the only agency with the ability to enforce anti-discrimination laws so it must continue to encourage compliance by conducting investigations and pursing litigation where necessary. In saying that, though, there is a balance to be struck between encouraging compliance through court action and acting in the shadow of litigation. In a recent underpayments case, the court was quite critical of the FWO’s strategy of pursuing litigation against a restaurant. In imposing the minimum penalty, McNab J took into account the “significant negative publicity” the restaurant and his businesses had experienced as a result of the FWO’s enforcement action and said it was an instance in which enforceable undertakings could have been considered instead.23 Selecting the most appropriate course of action will vary according to the nature of the breach.