Sydney man penalised after Fair Work probe

Heather McNab

A former Sydney entrepreneur, his wife, and three companies he operated have been penalised more than $250,000 after employees were allegedly underpaid over $1 million.

The Federal Circuit Court on Thursday handed down $62,730 in penalties against Kia Silverbrook plus further penalties against three companies he operated, a statement from the Fair Work Ombudsman said.

IT company Mpowa Pty Limited was penalised $96,900, solar cell research company Superlattice Solar Pty Ltd was penalised $40,800, and Priority Matters Pty Ltd, which processed patent applications, was penalised $51,000, the statement said on Thursday.

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

The ombudsman began investigating after receiving underpayment allegations from employees.

The underpayments were mainly the result of employees not being paid wages for periods of up to 10 months in 2013, the statement said.

Individual employee underpayments ranged from $436 to $214,483.

Engineers, scientists, patent attorneys, patent assistants, patent design assistants, IT professionals and clerical workers were among the underpaid employees.

"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," the statement said.

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

They described the impacts of being exploited, which included having to delay important life decisions such as starting a family, delaying health procedures and the inability to sleep.

The ombudsman secured $1.15 million plus interest in court-ordered back-payments during the course of the legal actions which started in 2013 and 2014.

These payments have been made by Mpowa, Superlattice Solar and Priority Matters to 33 underpaid employees.

Penalties and back-pay orders could not be collected against two other companies formerly operated by Mr Silverbrook, Geneasys Pty Ltd and Silverbrook Research Pty Ltd, as they have been placed into liquidation.

These were in response to more than $550,000 in underpayments of another 10 employees.

Fair Work Ombudsman Sandra Parker welcomed the 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 in a statement on Thursday.

"The court's penalty should warn all employers that they can face serious financial consequences for breaking workplace laws."