A Melbourne toy retailer has come under fire for underpaying its employees.

The news comes as the Fair Work Ombudsman (FWO) has started its first legal proceedings under the serious contravention provisions of the Protecting Vulnerable Workers laws.

Being accused of allegedly underpaying its workers selling Christmas toys, IE Enterprises which trades as Uncle Toys, operated pop-up stores in Ringwood, Hoppers Crossing, Preston, Frankston, Narre Warren, Cheltenham and Wantirna South shopping centres.

The FWO alleges that owner Eyal Israel and his business paid eight workers unlawfully low rates (from as little as $6.70 an hour), and did not pay some employees at all for some hours worked. Alleged underpayments of individual employees ranged from $395 to $5,041 reaching a total of $21,748.

Fair Work Ombudsman Sandra Parker says the Protecting Vulnerable Workers laws were enacted [in September 2017] in response to community concerns about the exploitation of employees in Australia.

“This is the first time the Fair Work Ombudsman will be relying on the new serious contraventions provisions in court, which carry maximum penalties 10 times higher than traditional contraventions,” she explains.

“We’re arguing that five alleged contraventions are serious because Uncle Toys and its director failed to correct the non-compliance, despite extensive engagement with us.

“We’re also utilising new reverse onus of proof provisions that require employers to disprove underpayment allegations in court if they have failed to adequately comply with time-and-wages records and pay slip obligations.”

The FWO was contacted by former employees asking for help as they had concerns regarding their pay.

“The Fair Work Ombudsman offers free workplace advice to employers and employees. We encourage anyone with concerns about their workplace rights or obligations to contact us.”

IE Enterprises and Israel face maximum penalties of up to $630,000 and $126,000 per contravention, respectively, for the five alleged serious contraventions relating to minimum wages, failing to issue pay slips, failing to keep records, failing to pay employees in full and making an unlawful deduction.