One of Australia's top Islamic schools has been hit with heavy penalties of more than $150,000 after hiring teachers on illegal contracts and later tampering with evidence to cover up the wrongdoing.

The Australian International Academy of Education – formerly King Khalid College – was found to have violated workplace law by employing more than a dozen teachers on fixed-term contracts in 2012.

Salah Salman (brown jacket) was heavily criticised in the judgment. Credit:Michael Clayton-Jones

Salah Salman, the school's director-general and a member of the Order of Australia, was also condemned and personally penalised $2,200 for obstructing union officials seeking to inspect the teachers' contracts.

Imposed in the Federal Court on Wednesday, the fines are believed to be among the largest penalties ever ordered against a school in Australia.