‘Reprehensible conduct’ attracts third-highest penalty ever secured by the FWO

The Fair Work Ombudsman (FWO) has secured a total of $5,146,100 in court penalties after retailer Blue Sky Kids Land Pty Ltd (Blue Sky Kids Land) exploited four migrant workers and hindered or obstructed Fair Work Inspectors despite being issued a legally binding Compliance Notice.

Here, our experts dive into the details of this case, explain what went wrong, and why it’s yet another stern reminder that the exploitation of migrant workers won’t be tolerated in Australia.

The case against Blue Sky Kids Land Pty Ltd

Blue Sky Kids Land and its directors, Mr Guo Dong Gu and Ms Fei Rong Yang have been penalised for multiple breaches of workplace laws, including migrant worker exploitation and underpaying four employees by a total of $131,920. Employed in retail roles between October 2015 and June 2018, the workers, who spoke limited English, were paid as little as $10 an hour – significantly below the National Minimum Wage.

In addition to the wage underpayments, the Court found that the company also breached workplace laws related to hindering or obstructing Fair Work Inspectors, record-keeping, and issuing pay slips, including the provision of false records to inspectors. The company committed most of the breaches, except for one instance of giving false or misleading records to an inspector, which was attributed to Q Fay Trading Pty Ltd. Mr Gu was involved in most breaches across both companies, while Ms Yang was linked to several underpayment breaches and one obstruction violation.

Serious contraventions bring serious penalties

Did you know that serious contraventions attracted a tenfold increase in the available maximum penalties? And this is exactly what occurred in this case.

The Court determined that several breaches committed by Blue Sky Kids Land and Mr Gu, specifically those related to minimum wages, record-keeping, and pay slips, met the definition of serious contraventions under the Fair Work Act’s Protecting Vulnerable Workers law reforms because of their deliberate and systematic nature.

The Federal Court imposed:

• a $4,299,000 penalty against Blue Sky Kids Land;
• $760,000 in penalties against company director Guo Dong Gu;
• $43,000 in penalties against company director Fei Rong Yang; and
• $44,100 in penalties against Q Fay Trading Pty Ltd (a business previously operated by Mr Gu and Ms Yang).

The penalties, combined with court-ordered back-payments, including superannuation and interest, send a strong message that repeated, intentional breaches of workplace laws will be met with significant consequences, particularly when vulnerable workers are exploited.

Fair Work Ombudsman Anna Booth condemned the company’s actions, particularly noting that Fair Work Inspectors had been engaging with Blue Sky Kids Land and its directors since 2006, placing them on notice to correct non-compliance issues. She stated, “these substantial penalties highlight that exploiting vulnerable migrant workers is particularly reprehensible conduct that will not be tolerated in Australia.”

When totalled, this outcome has resulted in the third-highest penalty ever secured by the FWO, only following the $15.3 million in penalties imposed against Sushi Bay and $10.3 million in penalties levied against Commonwealth Bank and CommSec, both in 2024.

How can Citation HR help?

Whether you’re a small business or part of a franchise network, ensuring compliance is essential. And while most business owners wouldn’t dream of intentionally committing wage theft, mistakes can and do happen – this is where Citation HR can help. Our workplace relations experts can complete a thorough HR compliance audit of your business – and the best part is that this service is included in our monthly, cost-effective subscription, designed to protect your business from costly risks.

If any of this information has raised any questions about how to prevent worker exploitation or you’ve got another matter you need assistance with, reach out to our experts via our 24/7 HR Advice Line.

Not a Citation HR client? To learn more about how Citation HR can support your business and streamline its people management practices, get in touch with our friendly team for a confidential, no-obligation chat here.

About our author

Zaynab Aly is a Senior Workplace Relations Consultant at Citation HR. She has a particular interest in the retail industry and regularly provides advice on workplace matters to find solutions for clients.