international employment law firm alliance L&E Global

Australia: Employer jailed for underpaying employees and breaching court orders

The Fair Work Ombudsman (FWO) is the Australian regulatory authority responsible for monitoring and enforcing compliance with the Fair Work Act 2009 (Cth) and other industrial laws.

In 2014, the FWO issued a “Compliance Notice” to a company named Trek North Tours, which is owned and operated by Mr Leigh Jorgenson. The Compliance Notice related to the alleged underpayment of five of Trek North Tours’ employees, worth a total of A$29,956.75. The five employees were backpackers who were visiting Australia and working as sales employees for Trek North Tours. The Compliance Notice required Trek North Tours to rectify the underpayments.

Trek North Tours did not comply with the Compliance Notice and, when the FWO contacted Mr Jorgenson regarding his non-compliance, he allegedly responded by stating “The compliance notices are rubbish. I have no intention of paying the money”.

In 2015, the Federal Circuit Court of Australia made an Order requiring Trek North Tours to rectify the underpayments identified in the FWO’s Compliance Notice. The Court further ordered Trek North Tours and Mr Jorgenson pay civil penalties in the sum of A$67,000.

Mr Jorgenson once again refused to rectify the underpayments, and he also failed to pay the civil penalties imposed by the Court. Furthermore, Mr Jorgenson transferred funds out of Trek North Tours’ bank account into a family trust account while also taking steps to deregister his business.

On 10 May 2018, the Court ordered Mr Jorgenson be imprisoned for 12 months, with an earlier release available upon payment of the outstanding amounts. Mr Jorgenson subsequently appealed the decision and, after having already spent a night in prison, he has been released pending the outcome of the appeal.

This is the first time the FWO has initiated contempt of court proceedings against an employer, and the first time an employer has been jailed as a result action taken by the FWO.