Real Estate Firm Fined $30,000 Over Sham Contracting And Underpayment

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18th December 2009, 12:34pm - Views: 621

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Media Release

  18 Dec 2009

Real estate firm fined $30,000 over sham

contracting and underpayment


Sydney real estate company and its director have been fined almost $30,000

for underpaying a salesperson more than $20,000 as a result of sham


The penalty – handed down in the Federal Magistrates Court – is the result of a

prosecution by the Fair Work Ombudsman. 

Land Choice Pty Ltd, which traded as Kingsford First National Real Estate until

October, 2008, has been fined $24,600 - and sole director Sugiharto Sugiharto

(correct) a further $4840 for his involvement.

Federal Magistrate Shenagh Barnes found the company had treated the female

salesperson “recklessly” by appointing her as an independent contractor instead

of an employee.  

The woman was a new-arrival from Singapore with no experience in the

Australian real estate industry.

The Court heard that the woman received just one payment of $1414.20 for

working an average of 40 hours a week from March 23, 2007 until her

employment was terminated on September 27, 2007.

She was underpaid more than $20,000, of which the company had only back-paid

$5000 in October, 2009. FM Barnes ordered Land Choice to repay the outstanding

$15,119 plus interest of $3104. 

In handing down her 44-page decision, FM Barnes said it had been submitted that

the real estate industry in NSW often paid individuals on a commission basis.

“Nonetheless, I accept that a message should be sent to the community, and to

the real estate industry in general, that employees should be correctly identified

and appropriately remunerated and should not be paid on a commission-only

basis if not licensed,” she said.

“The imposition of penalties does act as a warning to other employers and

reinforces the seriousness with which the courts treat the underpayment of

employee entitlements.

“Both small and large businesses have an obligation to meet these requirements.

If not, it will normally be necessary to mark the failure by imposing an

appropriate monetary sanction at a meaningful level.”

FM Barnes said Land Choice’s breaches represented “a significant failure to

provide basic and important wage and condition entitlements”.

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Fair Work Infoline: 13 13 94 


She said: “This continued for six months and involved, at the least, a reckless

disregard for the respondents’ obligations. It took some time to be acknowledged

and was not remedied before the (court) hearing beyond a $5000 payment.

“The penalty should reflect the need for some specific deterrence and more

particularly for general deterrence, reinforcing the seriousness with which the

courts treat the non-payment of basic employee entitlements.”

Fair Work Ombudsman Executive Director Michael Campbell welcomed the

outcome for what was the first prosecution by the Agency for sham contracting.

Mr Campbell says ignorance of the law is no excuse for employers underpaying

entitlements, reiterating that it is the responsibility of all employers, large and

small, to understand their lawful obligations to their staff. 

“We can help with that. We have over 200 Fair Work advisers manning our

national Infoline (13 13 94) from 8am to 6pm weekdays ready to field questions

and assist employers,” he said.

“Our website – – also provides a range of information to

help employers seeking up-to-date information on wage rates and conditions.”

The Fair Work Ombudsman promotes harmonious, productive and co-operative

workplaces and monitors compliance with and investigates breaches of national

workplace laws. 

Media inquiries: 

Craig Bildstien, Director Media & Stakeholder Relations  0419 818 484 Email:

Ryan Pedler: Mob: 0434 365 924; Email:

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