Online start-up Her Fashion Box is facing court for allegedly running an unlawful unpaid internship program and underpaying three workers more than $40,000.
The company and its sole director and majority shareholder Kathleen Enyd Purkis allegedly underpaid three employees a total of $40,543 for various periods of work between 2013 and 2015.
The employees, aged in their mid-20s, were underpaid their minimum hourly rates, overtime, public holiday pay and annual leave entitlement during this time.
A graphic designer engaged by Her Fashion Box was allegedly underpaid a total of $15,511 over a period of two years of full-time work as a result of underpayment of his minimum Award entitlements.
The second employee, engaged on a full-time basis as a brand partnerships manager, was allegedly underpaid a total of $18,119 over a 12-month period.
The third employee is said to have worked two-days per week for almost six months without pay, under the guise of ‘unpaid internship’ only receiving a single $1000 one-off payment. She was allegedly underpaid $6913.
It is also alleged that Her Fashion Box further contravened the law by failing to comply with four separate Notices to Produce documents or records issued by Fair Work inspectors.
A a result, Fair Work Ombudsman Natalie James commenced legal action due to a lack of co-operation with inspectors, as well as the significant amounts left unpaid to the young employees.
Her Fashion Box faces maximum penalties of up to $51,000 per contravention, with Purkis herself facing penalties of up to $10,200 per contravention.
The Fair Work Ombudsman is also seeking Court Orders requiring the company and Purkis to back-pay the employees in full. They have been only partially back-paid to date.
A directions hearing took place in the Federal Circuit Court in Sydney on May 31.
James said her agency had received a number of requests for assistance from former employees since 2015 with, claims they had been underpaid due to an allegedly unlawful ‘internship’ arrangement.
“Unpaid placements or ‘internships’ are legitimate in certain cases - for example, where they are part of a vocational placement related to a course of study.
“The law prohibits the exploitation of workers by characterising them as ‘interns’ or as doing ‘work experience’ when they are fulfilling the role of an employee. Such workers must be paid minimum employee entitlements.
“Legitimate internship and work placements can be a genuine way for people to further their learning or gain skills that assist in finding stable employment, but only if these arrangements are entered into lawfully in accordance with an approved program.
“Employers cannot simply choose to label an employee as an ‘intern’ in order to avoid paying their staff according to their lawful entitlements."