Hypothetical by Manny Wood Published in the Coffs Coast Advocate on 21 December 2019.

Santa is looking to reduce the costs of his international operations, so in April 2019 he opens a toy manufacturing factory at an undisclosed location in Australia, which will service the Southern Hemisphere.

A team of Santa’s Elves are relocated to Australia to operate the new factory and Santa hires an accounting firm, Krampus and Associates, to deal with payroll.

In November 2019, Santa is contacted by the Fair Work Ombudsman, who informs Santa that an anonymous complaint has been made alleging his Elves are being underpaid. The Ombudsman commences an audit of Santa’s operations in Australia.

Santa is outraged and immediately contacts Krampus to get to the bottom of the complaint. Santa obtains full details of the payroll and, after consulting his solicitor, Santa is satisfied that the Elves are in fact being paid less than the minimum entitlements under the Manufacturing and Associated Industries and Occupations Award 2010.

Santa contacts the Fair Work Ombudsman, admits the underpayment and promises to immediately rectify the mistake in the calculation of the Elves’ wages. Santa also makes a back-payment to the Elves to cover the shortfall since April. The Ombudsman issues Santa a fine for the underpayment, which Santa pays without dispute.

The Fair Work Ombudsman then contacts Krampus to investigate his involvement in the underpayment. Krampus explains that he simply continued paying the Elves what they were receiving in the North Pole (which has notoriously low cost of living expenses). Krampus claims that he was not aware of the provisions of the Award and that he should not be held responsible.

The Ombudsman commences proceedings against Krampus, who continue to deny responsibility for the underpayment.

The Court considers Krampus’ involvement and comments that the underpayment would have been revealed to Krampus after “even the most basic query”. The Court finds that Krampus was wilfully blind to the unlawful underpayment of the Elves and orders Krampus to pay a penalty of $54,000.

If you would like Manny to address a particular legal issue, send your request to manny.wood@ticliblaxland.com.au or call him on (02) 6648 7487.