Around November 2022, the Fair Work Ombudsman (FWO) commenced an investigation into Port Melbourne Cosmetic Clinic (PMCC), concluding that it had contravened the Fair Work Act 2009 (Cth) by underpaying 2 employees. PMCC operated a beauty and aesthetician company.
As a result of this finding, on 8 June 2023, the FWO issued a compliance notice to PMCC. The compliance notice required the business to rectify the contraventions by 12 July 2023, giving them just over one month after the compliance notice was issued.
Further, PMCC was required to provide the FWO with evidence that it had addressed and rectified the contraventions 19 July 2023.
PMCC did neither, and only remedied the contraventions on 20 January 2025. This was after the FWO had instigated proceedings in the Federal Circuit and Family Court of Australia (FCFCOA) on the basis of the underpayments, and the lack of compliance with the compliance notice.
Agreement on Penalties
The FWO indicated it would be seeking penalties for non-compliance with the compliance notice it issued in June 2023.
Penalties can be sought in addition to orders for remediation of breaches. This means that the ultimate cost of non-compliance can potentially extend far beyond what correcting the breach would have cost.
PMCC and Mr Abdelmalek entered into discussions with the FWO on the value of the penalties that should be imposed. An agreement was reached and was presented to the FCFCOA.
While the FCFCOA considered the agreement reached as to penalties, Judge Symons held that the FCFCOA is the final arbiter in the instance, and that it must be satisfied that the penalties were appropriate in the circumstances.
Why the Court Imposed Penalties Despite Backpayment
The FCFCOA considered a variety of matters such as the nature, circumstances and deliberateness of the conduct, the nature and extent of loss suffered, cooperation by the PMCC and Mr Abdelmalek in the proceedings and the financial circumstances of them both. However, arguably, the critical factor in arriving at its conclusion was the weight the FCFCOA gave to the deterrent function of the penalties.
Crucially, the FCFCOA held that in penalty cases, general deterrence must be imposed so as to ensure that any penalty imposed is not seen as ‘the cost of doing business’.1 The FCFCOA accepted the general need for deterrence in the beauty industry in which PMCC operated, but also that there was a specific need for deterrence in the sense that PMCC and Mr Abdelmalek still continued to operate at the time the case was heard.
The Court’s Ruling
In its decision on 21 August 2025, the FCFCOA imposed penalties on both PMCC and Mr Abdelmalek, for their failure to comply with the compliance notice. Those penalties were:
- PMCC was fined $23,496; and
- Mr Abdelmalek as PMCC’s sole director was fined $4,699.
Ultimately, the FCFCOA accepted the agreement reached between the parties as an appropriate response given the conduct involved.
As noted, a total of $28,195 in penalties were imposed on the PMCC and Mr Abdelmalek for non-compliance. Importantly, this was in addition to the payments it had already made to workers as backpayment for unpaid wages and entitlements.
FWO Position on Litigation
FWO will not give you warning of intended litigation. In this case, there is no indication that the FWO informed or warned PMCC or Mr Abdelmalek that it intended to litigate the matter.
Despite eventually remedying the underpayments and taking action to comply with the compliance notice, the FWO determined it was appropriate to commence litigation, and importantly, continued that course of action despite the eventual remediation of the underpayments.
Key Lessons for Employers
- Non-compliance has consequences: Delaying or ignoring a compliance notice can lead to court proceedings and significant financial penalties, even if underpayments are later rectified.
- No warning before litigation: The FWO is not required to notify employers before initiating court action, and will proceed even after remediation if deadlines are missed.
- Penalties go beyond backpay: Employers risk separate fines on top of underpayment remediation — penalties that can affect both the business and its directors personally.
- Deterrence is a key priority: The courts place strong emphasis on general and specific deterrence. Employers who continue to operate after breaching obligations can face harsher scrutiny.
- Early legal advice is critical: Timely advice can help you meet deadlines, respond to notices properly, and minimise legal risk.
Final Thoughts
The FWO has made it clear that it will not suffer non-compliance, and in particular, failure to comply with a FWC issued compliance notices. This case shows perhaps a clear example of a high level of non-compliance, with PMCC and Mr Abdelmalek only taking action to comply once legal proceedings had been initiated.
If you need help with navigating compliance notices or conducting audits to review potential underpayment claims, please contact our team today.
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