Massage parlour workers' pay docked for 'lacking passion' - Sydney Morning...

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Problems relating to massage parlours ripping off their workers date back years.


Massage parlours around the country are being accused of systemic wage fraud, sham contracting and in some cases contracts that dock workers' pay if they are late for work, "lack passion" or too noisy.

In the latest development in the foreign student and 417 working holiday visa wage exploitation scandal, Fair Work raided 18 massage parlours in late February and found all were non-compliant with key workplace obligations.

Another reminder to employers who flout their workplace obligations that there will be financial penalties if they are caught.

Natalie James​

Compliance violations included failing to issue pay slips, lack of employment records and foreign workers on a visa paid a percentage of each massage – usually 50 per cent – rather than an hourly rate or the correct visa-nominated salary and with no remuneration for periods they spent at the business without clients.

Many foreign workers have found themselves in a position of vulnerability.


Unfortunately, flouting work place laws isn't new to massage parlours. Nor is it new to other parts of the economy. With 1.3 million workers on visas, which is equivalent to one in 10 workers, it is undermining the economic fabric of the country, as well as being a violation of human rights.

Sectors of the economy including agriculture, hospitality, cleaning, convenience stores and trolley collection have been exposed as some of the worst offenders when it comes to wage fraud.

In late August, Fairfax Media and Four Corners jointly exposed systemic wage abuse across the 7-Eleven convenience store giant. In 7-Eleven's case, many of the thousands of workers are students on visas, who are only allowed to work 20 hours a week without breaching their visa conditions. The Fair Work Ombudsman raided 20 7-Eleven stores in September 2014 and found that 60 per cent of the 20 stores raided had payroll issues.

Fair Work Ombudsman Natalie James. Photo: Jesse Marlow


Around the same time, it kicked off a national review of the wages and conditions of foreign workers in Australia on the 417 working holiday maker (WHM) visa after receiving allegations that unscrupulous operators were exploiting backpackers.

Problems relating to massage parlours ripping off their workers date back years, with the Fair Work Ombudsman conducting dozens of raids across the country since 2009. During that period the raids have unearthed wage problems and other work-related contraventions as high as 60 per cent.

The regulator's latest series of raids in February, mainly in Hobart and Adelaide, include some previous offenders, who were found to be continuing to be doing the wrong thing. This suggests the penalty rates aren't a big enough deterrent, something the government needs to look into.

It is why the Fair Work Ombudsman recently argued in the Federal Circuit Court of Australia "there is a need to send a serious message to the respondents that the court will not countenance attempts to disguise employment relationships and thus deny employees their required minimum entitlements".

The case brought by Fair Work against Lu's Healthcare related to sham contracting between 2011 and 2013. The massage parlours, located in Melbourne's central business district and Richmond, allegedly underpaid two workers to the tune of tens of thousands of dollars.

According to court documents, a male massage therapist was underpaid $33,000 and a 19-year-old female therapist was underpaid $21,000. According to Fair Work, they should have been paid the minimum wage under the Health Professionals and Support Services Act.

Workers also had money illegally taken from their wages using an inhouse code of conduct, including fines of up to $100 if a worker was late for work or fines of $50 for a "lack of passion or good hospitality" and the ominous clause "employees with other problems will undergo serious punishment". The code also included a "disturbance of the work environment category", which fined employees $20 for "noise making and playing around" and sleeping or lying on massage tables. Punishment for "resistance to hard work" was being "put back into apprenticeship again".

When Fair Work took legal action against Lu's Healthcare, the company decided to repay the two workers the money they were owed.

Then on March 10 the Federal Circuit Court imposed penalties of $112,860 on Lu's Healthcare Pty Ltd and $5940 on director Kun Wang, which was equivalent to 36 per cent of the maximum penalty that could have been imposed.

Delivering his decision in the Federal Circuit Court, Judge Sullivan, noted: "It does not escape my attention that, in terms of cash flow, the delay in paying basic remuneration to employees engaged in what can only be described as basic employment leads to a very strong inference that the hardship occasioned to those employees would have been greater than might otherwise be expected for higher paid employees, who one would expect to be better financially resourced."

Fair Work Ombudsman Natalie James said in a statement the penalties "should serve as yet another reminder to employers who flout their workplace obligations that there will be financial penalties if they are caught".

She said the business model identified at Lu's Healthcare was relatively common across massage businesses.

Sadly, employees interviewed by Fair Work inspectors said how difficult it was for them to find employment. Some were foreign students, who had recently completed their studies, but were unable to find work in their chosen professions.

It is understood that one business had a single employee who was paid cash-in-hand (a percentage of the massages completed each day).

The employee was Chinese and had a degree in agriculture. She was a single parent with two children in primary school. She commented how difficult it was to find full-paying employment, because she was a single parent with limited time.

One employee from Thailand was employed to manage a shop.

She advised that she "felt like a part-owner of the shop and was grateful the employer had provided her with a senior role". However, she also advised that she only received $60 a day for working an eight-hour day.

Foreign workers play a vital role in the Australian economy.

For various reasons, including limited language and a lack of knowledge of their rights, many foreign workers have found themselves in a position of vulnerability which has made them targets for unscrupulous behaviour. These behaviours are undermining the economy and our reputation.


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