A former Shark Tank winner has been hit with a huge $329,133 penalty for exploiting workers.
The Federal Circuit Court penalised Her Fashion Box Pty Ltd $274,278.
It also penalised its sole director, Kathleen Purkis, a further $54,855.
Purkis underpaid a number of employees, and engaged one unlawfully to work for free as an unpaid intern.
Purkis founded the online fashion store, Her Fashion Box, which sold subscription boxes of fashion accessories and beauty products.
In 2016, Purkis appeared on Network 10’s Shark Tank program where she secured a $200,000 investment from judges Janine Allis and Andrew Banks in exchange for 16 percent of her business.
In 2015, she was a finalist in the Telstra women business awards.
Underpayments and unpaid internship
However, an investigation in 2017 found Purkis underpaid three workers a total of $40,543.
One worked as a graphic designer two days a week under a purported ‘unpaid internship’ for six months, without receiving any pay.
Purkis gave her a one-off “Christmas bonus” of $1,000 – which left her $6,913 out of pocket.
Her Fashion Box underpaid another graphic designer a total of $15,511 over a period of two years of full-time work.
The worker told the court the underpayments left him struggling to pay for basic living expenses.
Purkis underpaid a third worker, a brand partnerships manager, a total of $18,119 over a 12-month period.
Underpayments ‘significant and deliberate’
Judge Nicholas Manousaridis described the contraventions as “serious and sustained contraventions of important provisions of the Fair Work Act”.
He also described the underpayments as “significant and deliberate”.
Judge Manousaridis found Purkis knew she had been ripping off her workers.
Therefore, he said a substantial penalty is required to deter others from similar conduct.
“The penalty should be set at a level that… should signal to employers who might be tempted not to inquire into their legal obligations as employers or not to comply with their legal obligations, particularly in relation to inexperienced workers, that there is a significant risk of being exposed to the imposition of a pecuniary penalty if they are to succumb to such temptation.”
Internships a way to avoid paying wages
Miles Heffernan from IR Claims says the case is a warning to employers.
“All too often businesses label young workers as ‘interns’ as a way to avoid paying proper wages and entitlements,” he said.
“Unpaid internships should only last a short period of time, and should be a requirement of a legitimate university or training course.
“The minute unpaid ‘interns’ are not learning and benefiting from the engagement, and are instead doing work that a paid employee would normally do, then they should be paid.”
“A WHOPPER OF A RIP OFF – HUNGRY JACK’S SLAMMED FOR INTERNSHIPS”
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