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Random audits of dozens of Victorian brothels found more than 70 percent in breach of workplace law, the Fair Work Ombudsman revealed today.

Nineteen brothels – most in metropolitan Melbourne – were found to have underpaid more than 50 of their staff over $65,000.

The Fair Work Ombudsman decided to check the wages and conditions of clerical workers after recording a string of inquiries from brothel managers about proper entitlements.

Inspectors scrutinised the books of 62 brothels after receiving intelligence that most clerical staff in brothels were likely to be female, from a non-English speaking background and unlikely to complain about exploitation for fear of reprisals.

They looked at record keeping and payslips, base rates of pay, weekend penalties, public holiday rates, overtime rates and shift rates.

Some staff were interviewed to enable inspectors to verify information provided by brothel owners.

Businesses audited were located in Melbourne’s CBDwesterneastern and  northern suburbs, theMornington PeninsulaYarra ValleyHigh Country, on the Great Ocean Road and the Daylesford andMacedon Ranges.

The targeted campaign followed three-months of extensive stakeholder engagement with the Australian Adult Entertainment Industry Inc (AAEI).

The Resourcing Health and Education in the Sex Industry (RHED), Australian Federal Police (AFP), Victoria Police Sex Industry Co-ordination Unit and Victorian Department of Justice Business Licensing Authority were also consulted.

Of the 62 businesses, 44 (71 per cent) collectively were found to have 63 workplace contraventions.

Nineteen premises had collectively underpaid 51 of their employees a total of $65,508, while others had record-keeping, pay slip and technical contraventions.

The biggest underpayment was $12,800 for 10 employees at a Melbourne brothel which had underpaid the minimum hourly rate and penalty rates for shift, weekend and overtime work.

Another at Geelong underpaid five employees a total of $3635 and on the Mornington Peninsula an operator had short-changed three staff a total of $2126.

Some businesses were found to have misclassified employees as independent contractors.

Record-keeping contraventions included the failure to include required information on employee pay slips.

Fair Work Ombudsman Natalie James says that where mistakes were found, employers worked with her inspectors to rectify them voluntarily.

“The contraventions appear to be genuine errors by employers rather than deliberate attempts to underpay employees,” she said.

When first advised of the proposed campaign, the AAEI made written submissions to the Fair Work Ombudsman requesting further consideration of the relevant industrial instrument applicable to reception staff and brothel managers.

As part of its review, the Fair Work Ombudsman sent inspectors to several brothers to observe the work of managers and receptionists.

Media Release from Fair Work Ombudsman 8 February 2014

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