Commercial Litigation, Debt Recovery & Insolvency

Employment Law

Unpaid Wages and the Fair Entitlements Guarantee

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Unpaid Wages and the Fair Entitlements GuaranteeThe Fair Entitlements Guarantee (“FEG”) is a statutory safety net where the Australian Government will pay employee entitlements to eligible employees of a company that gets wound up in insolvency, or for people who have been made bankrupt.

The Federal Government will pay:

  1. Up to 13 weeks of unpaid wages;
  2. Any unpaid annual leave and long service leave;
  3. Up to five weeks payment in lieu of notice; and
  4. Up to four weeks per full year of redundancy pay.

The fair entitlements guarantee is provided in the Fair Entitlements Guarantee Act 2012 (Cth) (“the FEG Act”) and the Fair Entitlements Guarantee Regulation 2012 (Cth) (“the Regs”).

Our lawyers can advise and assist with statutory demands, winding up applications, Fair Entitlements Guarantee claims, and the review of decisions in the Administrative Appeals Tribunal

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What is the Fair Entitlements Guarantee?

Section 6 of the FEG Act defines the various kinds of employment entitlements of a person whose employment by an employer has ended, including:

  1. Annual leave entitlement;
  2. Long service leave entitlement;
  3. Payment in lieu of notice entitlement;
  4. Redundancy pay entitlement; and
  5. Wages entitlement.

Section 7 of the FEG Act defines “wages” to include the following:

  1. Allowances;
  2. Loadings;
  3. Amounts payable for overtime;
  4. Amounts payable at penalty rates; and
  5. Other amounts that the governing instrument for the relevant employment identifies separately and makes payable regularly.

Read the definitions in sections 6 and 7 of the FEG Act to know what the above relates to.

Why does the Fair Entitlements Guarantee Exist?

The FEG exists to protect vulnerable workers from losing their employment due to the insolvency of the employer company.

In the explanatory memorandum to the Fair Entitlements Guarantee Bill 2012 (Cth) it says:

The scheme … is necessary to fulfil a significant community need to protect the entitlements of Australian employees who would otherwise stand to lose their entitlements if they lose their jobs due to insolvency of their employer.

In Jones (Liquidator) v Matrix Partners Pty Ltd Re Killarnee Civil and Concrete Contractors Pty Ltd (In Liq) [2018] FCAFC 40 Justice Allsop CJ said:

The protection of employees in the aftermath of the insolvency of businesses is, and has been for many years, a matter of high public policy. The vulnerability of those who work in an employment relationship to the financial consequences of the decisions of business controllers and the economic environment is well-known. It has been consistently addressed in terms of priority in access to funds and latterly by a qualification to the reach and operation of securities over the assets of the business enterprise. That statutory addressing of the question as a Parliamentary response has been informed by considerations of the protection of the vulnerable and of fairness in the operation of the insolvency regime…

Essentially, the objective of the scheme is to provide for the provision of financial assistance to former eligible employees where the end of their employment is linked to the insolvency or bankruptcy of their employer.

An employee must be an eligible employee for the purposes of FEG.

Who is an Eligible Employee?

Section 10 of the FEG Act defines the general conditions for eligibility, they are:

  1. The person’s employment by a particular employer has ended;
  2. An insolvency event happened to the employer;
  3. The end of the employment:
    1. was due to the insolvency of the employer; or
    2. occurred less than 6 months before the appointment of an insolvency practitioner for the employer; or
    3. occurred on or after the appointment of an insolvency practitioner for the employer;
  4. The person is owed one or more debts wholly or partly attributable to all or part of one or more employment entitlements;
  5. The person has taken reasonable steps, to prove those debts in the winding up or bankruptcy;
  6. If the person was owed any of those debts before the insolvency event happened, the person took reasonable steps before that event to be paid those debts;
  7. When the employment ended, the person was an Australian citizen or, the holder of a permanent visa or a special category visa.

This eligibility criteria is subject to a number of exclusions.

Who is Not an Eligible Employee?

Section 11 of the FEG Act defines the exclusions.

A person is not eligible if they are an excluded employee pursuant to section 556 of the Corporations Act 2001 (Cth) – namely a director or previous director, a spouse of a director or previous director, or a relative of a director or previous director of the company.

  • “Spouse” of a person is defined to include a de facto partner of the person.
  • “Relative” in relation to a person, is defined to mean the spouse, parent or remoter lineal ancestor, child or remoter issue, or brother or sister of the person.

Different eligibility criteria apply to the Corporations Act and the Bankruptcy Act.  You should read Section 11 of the FEG Act.

Also, a person is not eligible if they converted from contractor status to employee status with the same employer within 6 months of the insolvency event.

One of the most crucial elements of the eligibility requirement is the causal link between the insolvency of the employer and the end of the person’s employment.

The Causal Link to the Insolvency Event

In the explanatory memorandum to the Fair Entitlements Guarantee Bill 2012 (Cth) it says:

The causal link between the insolvency of the employer and the end of the person’s employment is a crucial element of the eligibility requirement.

Section 10(1)(c) of the FEG Act defines eligibility if the end of the employment – (i) was due to the insolvency of the employer; or (ii) occurred less than 6 months before the appointment of an insolvency practitioner for the employer; or (iii) occurred on or after the appointment of an insolvency practitioner for the employer.

Subsections (ii) and (iii) are straightforward and can be calculated in accordance with relevant dates.

However, subsection 10(1)(c)(i) is less easy to define because what does “due to the insolvency of the employer” mean?

To unpack this, we need to understand what “insolvency” means and what “due to” means.

In relation to company insolvency, read our article – When is a Company Insolvent?

In relation to the phrase “due to”, the dictionary defines “due to” to mean “attributable to”, “caused by”, “ascribed to”, and/or “ascribable to”.

So, the end of employment must be caused by the insolvency of the employer.

In Milardovic and Secretary, Department of Employment [2019] AATA 213 Member K Parker said:

A key issue in this case is whether Mr Milardovic’s employment ended due to the insolvency of VS. This requires the Tribunal to determine:

(a) when Mr Milardovic’s employment with VS ended;

(b) whether VS was insolvent at the time Mr Milardovic’s employment with VS ended; and

(c) if so, whether Mr Milardovic’s employment ended due to the insolvency of VS.

So, evidence in relation to the above will need to be provided to FEG in order for them to make the assessment.

For more information read the Eligibility for FEG Assistance Factsheet from FEG.

Making a Fair Entitlements Guarantee Claim

A fair entitlements guarantee claim can be made online at the Federal Government Website.

First you will have to register.  Once registered you will need to file your claim.

Read the very good How do I access FEG Online Services factsheet.

It is mandatory that you provide evidence of citizenship status at the time the employment ended so that FEG can assess your eligibility.

This can be passport, visa, birth certificate, Immicard, or Registration by Descent document.

You may also be asked to provide:

  1. The signed employment contract or letter of appointment;
  2. Any payslips;
  3. PAYG payment summaries;
  4. Bank statements for the 13 weeks prior to the relevant date;
  5. Bank statements for the 30 days immediately after your employment ended;
  6. Evidence of weekly or annual wage rate;
  7. Separation certificate; and
  8. Letter of termination.

If you are eligible because of section 10(1)(c)(i) of the FEG Act, you may also be required to make submissions in relation to why your employment ended due to the insolvency of the employer, namely:

  • When the employment ended;
  • Whether the company was insolvent at the time the employment ended; and if so
  • Whether the employment ended due to the insolvency of the company.

How long do you have to make your FEG claim?

Time Limits for Fair Entitlements Claim

Section 14(2) of the FEG Act says:

(2) The claim must be made before the end of 12 months after the later of the following events:

(a) an insolvency event happens to the employer;

(b) the person’s employment by the employer ends.

An “insolvency event” is defined in section 5 of the FEG Act:

An insolvency event happens to an employer of a person:

(a)  when a liquidator of the employer is appointed (provisionally or otherwise) under the Corporations Act 2001 ; or

(b)  when the employer becomes a bankrupt under the Bankruptcy Act 1966 ; or

(c)  if the person is or was employed for a partnership by 2 or more of the partners–at the first time an event described in paragraph (a) or (b) happens, or has happened, to all of the partners by whom the person is or was employed.

So, the Fair Entitlements Guarantee claim must be from 12 months of the later of the employment ending, or the appointment of a liquidator or bankruptcy trustee.

Best Practice – Get your claim filed as soon as possible.

Once filed by an eligible employee, the authority will work out your entitlements.

The employee will be paid the basic amount for each (if applicable):

  1. Wages entitlement;
  2. Annual leave entitlement;
  3. Long service leave entitlement;
  4. Payment in lieu of notice entitlement; and
  5. Redundancy pay entitlement.

If you are deemed ineligible or the amount of the payment is insufficient, then there are a couple of things that a person is able to do.  These include:

  1. Seeking an internal review of the decision; and/or
  2. Seeking a review by the Administrative Appeals Tribunal.

We will explain this process in more detail below.

Seeking an Internal Review of the Decision

Section 38 of the FEG Act says:

(1)  A person may apply to the Secretary for review of:

(a)  a decision whether the person is eligible for an advance; or

(b)  a decision on the amount of an advance the person is eligible for.

Generally, the application must be made within 28 days after the date of the notice of the decision.

The application for internal review must be in writing and must state the reasons why the application is being made; and set out, or be accompanied by, any information or documents relating to those reasons.

If a person applies for a review of a decision, section 39 of the FEG Act says:

The Secretary must review the decision and:

(a)  affirm the decision; or

(b)  vary the decision; or

(c)  set the decision aside and substitute a new decision.

If the authority affirms the decision or varies the decision and it is still not reasonable, then an employee can apply to the Administrative Appeals Tribunal.

Seeking a Review by the Administrative Appeals Tribunal

The Administrative Appeals Tribunal (“AAT”) provide independent merits review of a wide range of administrative decisions made by the Australian Government, including Fair Entitlement Guarantee decisions.

Section 40 of the FEG Act allows an application to be made to the Administrative Appeals Tribunal by a person for review upon certain conditions in relation to eligibility or the amount of money payable.

Appeals to the AAT can be made online – https://forms.aat.gov.au/landing.htm?formCode=app-for-review

Generally, the application for review by the ATT must be made within 28 days of being given the internal review decision.

We strongly advise seeking legal assistance in relation to reviewing a FEG decision.

Can an Employee Wind Up a Company?

Section 459E of the Corporations Act 2001 (Cth) says:

A person may serve on a company a demand relating to:

(a)  a single debt that the company owes to the person, that is due and payable and whose amount is at least the statutory minimum; or

(b)  2 or more debts that the company owes to the person, that are due and payable and whose amounts total at least the statutory minimum.

The statutory minimum is $2,000.00.

So, if a company owes unpaid wages to the employee, and the unpaid wages amount is more than $2,000.00, then the person can serve a creditor’s statutory demand.

Serving the Employer with a Statutory Demand

If the employer is a company, then section 459E allows the employee to serve a creditors statutory demand for payment of the wages.

A statutory demand is a demand made on an insolvent company (not a person) for the payment of a debt or debts, including unpaid wages.

Once served with the statutory demand, the employer will need to do one of the following within a strict 21-day timeframe:

  1. Pay the amount of the debt or debts; or
  2. Secure or compound for the debt to the employee’s reasonable satisfaction; or
  3. Apply to set the demand aside.

If the employer company fails to do any of these things within 21 days, then it is presumed to be insolvent and the employee (or employees) can apply to wind the company up in insolvency.

As soon as the company goes into liquidation, if the employee is an eligible employee, then the employee with be entitled to the Fair Entitlement Guarantee claim.

Read our Complete Guide to Statutory Demands

However, care must be taken to particularise the debts and the amount of the debts correctly or face a potential application to set the statutory demand aside.

Defect in the Demand Causing Substantial Injustice

One of the grounds that a statutory demand can be set aside is where there is a defect in the demand that may cause the employer substantial injustice.

Section 459J(1)(a) of the Corporations Act says:

(1)  On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:

(a)  because of a defect in the demand, substantial injustice will be caused unless the demand is set aside

There are a number of calculations in relation to unpaid entitlements that may cause a defect in the demand including correctly calculating:

  1. Unpaid wages;
  2. Unpaid annual leave;
  3. Unpaid long service leave;
  4. Unpaid payment in lieu of notice; and
  5. Unpaid redundancy pay.

It is extremely important that these calculations are 100% correct.

Tekno Autosports Pty Ltd v Jenkins [2014] FCA 774 is a case relating to a statutory demand served on a debtor company in relation to unpaid wages.  In this case a number of disputes arose in relation to the amount of the debts, including a dispute as to whether the demand should be gross wages or net wages.  In his decision, Gleeson J said:

I am satisfied that there is a genuine dispute as to the amount of the debt insofar as it claims Mr Jenkins’ gross salary without deducting the tax required to be deducted by clause 3.4 of the employment contract.

Issuing a statutory demand for non-payment of wages and employment entitlements is more complicated than non-payment of invoices for example.

We strongly recommend engaging a qualified solicitor to draft and serve a statutory demand.

Winding Up the Company

Non-compliance with a statutory demand raises the legal presumption that the company is insolvent.

With that legal presumption assisting, the employee to make an application to wind the company up in insolvency.

If the company has a liquidator appointed, then the eligible employee (and all of the eligible employees) will be entitled to the Fair Entitlements Guarantee.

Our lawyers can advise and assist with statutory demands, winding up applications, Fair Entitlements Guarantee claims, and the review of decisions in the Administrative Appeals Tribunal

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To contact the FEG Hotline:

Mon – Fri, 9 am – 5 pm (AEST/ADST)

Wayne Davis Lawyer Sunshine Coast

Wayne Davis, LLB, GDLP – Commercial litigation solicitor and legal practice director at Stonegate Legal Pty Ltd. Stonegate Legal focus on commercial litigation, debt disputes, the enforcement of money orders, and insolvency. Committee member of the Sunshine Coast Law Association. Committee member and volunteer lawyer with the Sunshine Coast Community Legal Service.

stonegatelegal.com.au/

Wage Theft – Underpayment of Wages

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Wage Theft and the Underpayment of Wages in Queensland lawyerWage theft is the non-payment of your legal entitlements by your employer, including award rates, penalty rates, wages, and overtime.

If your employer has stolen your wages then you may have a claim in the Federal Court, Federal Circuit Court, the District Court, or the Magistrates Court.

You can seek an order from your employer and also any person involved in the contravention.

There are processes that should be followed in different situations, and include negotiation, reporting to the Fair Work Ombudsman, mediation, conciliation, and filing a claim in Court.

This article will explain the requirements and the process of making a claim for wage theft below.

If you have not been paid your legal entitlements by your employer, including award rates, penalty rates, wages, and overtime – then you might have a wage theft claim against the employer

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What is Wage Theft?

The term wage theft can take a number of different forms, including:

  1. Not being paid the correct hourly rates;
  2. Illegal cash-back contracts;
  3. Being paid cash-in-hand or off-the-books;
  4. Non-agreed deductions from wages;
  5. Unpaid overtime and penalty rates;
  6. Illegal phoenixing;
  7. Sham contracting arrangements; and
  8. Non-payment superannuation.

We will detail these in more detail below.

Not Being Paid the Correct Hourly Rates

Probably the most common form of wage theft is not being paid the correct hourly rates.

For the most part, minimum hourly rates are prescribed by the relevant modern award.  If you are not being paid the correct amount, then your employer is stealing your wages and you will have a claim.

Modern awards include all the information you need to understand your entitlements including information in relation to:

  • Types of employment and termination of employment;
  • Classifications and minimum wage rates;
  • Hours of work and related matters;
  • Leave and public holidays; and
  • Industry specific provisions.

The modern award defines the type of work classification and the minimum pay amount in relation to that classification.

Another common form of wage theft is an employer paying an employee at a level 2 rate, when the employee is doing level 4 work.  If your employer is doing this then they are stealing your wages and you may have a claim.

Click to go to the list of Modern Awards here

Another way that an employer can steal an employee’s wages is by paying cash-in-hand.

Being Paid Cash-in-hand or Off-the-books

Although a seemingly good prospect, getting paid cash-in-hand or off-the-books can also result in wage theft.

Being paid cash-in-hand or off-the-books may mean that your employer is not paying superannuation, leave entitlements, and other entitlements, etc.

Also, because the non-payment of tax seems enticing, the employer may also pay you less than the minimum wage.

It is possible to be paid in cash, that’s not the problem, but the employer must still pay all of your entitlements and provide you with a payslip.

Being paid cash-in-hand or off-the-books can result in wage theft and you may have a claim.

Unpaid Overtime

Your Modern Award will provide for the amount of hours a full-time employee has to work per week and overtime rate of pay for hours worked outside of ordinary time.

These rates of pay are usually around 150% to 200% – aka time-and-a-half to double-time.

If your employer has not paid any overtime rates, then this is wage theft and you may have a claim.

Unpaid Penalty Rates

Also, your Modern Award will provide for the penalty rate that the employee is entitled for working on the weekend or on a public holiday.

These rates are usually between 125% to 250% – aka time-and-a-quarter to double-time-and-a-half.

If your employer has not paid any penalty rates, then this is wage theft and you may have a claim.

Find your penalty rate amount in your Modern Award here.

Illegal Cash-Back Schemes

In some instances, an employer may make an employee give back a percentage of their wages.  This is sometimes known as a “Cash-back scheme”.

If this happens, then that money is treated like back-pay and can be claimed from the employer.

If your employer is making an employee pay “cash-back” then this is wage theft and the employee may have a claim.

Non-Agreed Deductions from Wages

An employer and an employee can agree that certain deductions can be made from the employee’s wages.  An employer can only deduct money if:

  1. The employee agrees in writing; and
  2. It’s principally for the benefit of the employee; and
  3. It’s allowed by a law, a court order, the Fair Work Commission, a modern award, or registered agreement.

Any deductions that are not agreed or are not for the benefit of the employee are wage theft and the employee may have a claim.

Illegal Phoenixing

Phoenixing is a term used to describe the act of transferring business assets to another company, continuing to trade in the new company, and leaving debts and liabilities in the old company – including employee wages and entitlements.

Usually, the old company will go into liquidation with a very slim chance of getting any money.

If your employer does this then this is wage theft and the employee may have a claim.

An employee may be entitled to the Governments Fair Entitlements Guarantee (“FEG”).

Click to learn more about the FEG here.

Sham Contracting Arrangements

A sham contract is when an employer tries to disguise an employment relationship with a contractor relationship, and incorrectly classifies an employee as an independent contractor.

An employer may try to pay an employee as a contractor so that the employee will lose their entitlements, including superannuation and leave entitlements.

Whether someone is an employee, or a contractor depends on a number of different complex factors and is usually determined by the Court.

However, if an employee is a party to a sham contract then this may be wage theft and the employee may have a claim.

Non-payment of Superannuation

Unfortunately, another common form of theft (albeit, not wages per se) is the non-payment of superannuation.

Most employment relationships require the employer to contribute a minimum of 9.5% of your wages into a superannuation account.

Every dollar that goes into superannuation now will be worth a lot more by retirement age, so it is very important that an employer pays this entitlement.

If your employer has not paid, or underpaid, your superannuation then the employee may have a claim.

Can I Make a Claim for Wage Theft?

If you fit into any of the categories above, then it is likely that you will be able to make a claim against your employer for unpaid wages and entitlements.

Obviously, each claim is different and will depend on the particular work, the Modern Award, and the employment contract.

Making a Claim for Wage Theft

The starting point for any claim for wage theft is section 45 of the Fair Work Act 2009 (CTH) (“FWA”).

Section 45 of the FWA says:

A person must not contravene a term of a modern award

A modern award sets out the minimum employment terms and conditions.

These minimum employment terms and conditions include:

  1. Wages and pay;
  2. Employment allowances;
  3. Staff breaks – duration and time;
  4. The hours of work;
  5. Any overtime payable; and
  6. Any penalty rates payable.

Note: Section 45 of the FWA is a civil remedy provision.

Section 539 of the FWA outlines the Civil remedy provision, the person, the Courts, and the maximum penalty.

The table in subsection (2) of this section says that a breach of section 45 of the FWA applies to an employee and an employer (amongst others).

It also defines the Courts which have jurisdiction as the Federal Court; the Federal Circuit Court; and an eligible State or Territory court.

The Wage Theft Process

The process for making a wage theft claim for unpaid entitlements is:

  1. Work out exactly what the employee is owed;
  2. Try to negotiate with the employer to reach a settlement;
  3. Report the employer to the Fair Work Ombudsman (“FWO”);
  4. Commence legal action in the Court with jurisdiction;
  5. Sometimes the Court will order mediation or conciliation;
  6. Obtain a judgment against the employer;
  7. Enforce the judgment.

This is an over-simplification of the process, but this is essentially what an employee will need to do.

We will explain the process in more detail below.

Work out Exactly what the Employee is Owed

It is important to work out exactly how much money the employee is owed.

Correctly calculate the exact amount (or as reasonably close as possible).  This will include:

  1. The minimum rate of pay calculated at the correct level;
  2. Any allowances allowable;
  3. Any leave loading that has accrued;
  4. Any leave payments that have not been paid;
  5. Any overtime that has not been paid;
  6. Payment of the correct penalty rates;
  7. Any additional tax and superannuation; and
  8. Any entitlements in the award, employment contract or other agreement.

Once the employee has a figure calculated, it is best practice to approach the employer, or engage a solicitor to approach the employer, to attempt to reach a settlement.

Negotiate with the Employer to Reach a Settlement

Most good lawyers will attempt to resolve wage theft claims without going to Court.  Going to Court can be stressful and costly for both parties, so there is a real incentive to try to reach an agreement by negotiation.

Litigation lawyers are skilful negotiators, and it is well worth engaging a litigation lawyer to negotiate on your behalf.  Reaching a settlement will involve a compromise by both parties.

Read our article here about Settling Litigation Early.

If the employer is being unreasonable and refusing to settle, then the employee can refer the matter to the Fair Work Ombudsman (“FWO”).

Report this Employer to the Fair Work Ombudsman

The Fair Work Ombudsman is there to provide help and assistance in relation to:

  1. Wage theft – disputes relating to pay, penalty rates, any loadings and allowances;
  2. Ending employment – giving notice, employees final pay and redundancy packages;
  3. Leave entitlements including annual leave, sick leave, maternity leave and parental leave;
  4. Any sham contracting arrangements; and
  5. Anything covered by an award, enterprise agreement or other registered agreement.

The FWO will then attempt to resolve the dispute with the employer by negotiation in an attempt to reach a settlement.

If no settlement can be reached informally, then the FWO can refer the matter to a mediation.

A mediation is usually a telephone conference where the employee and the employer work with a skilled mediator to help the parties in dispute to come to a reasonable agreement to resolve the wage theft dispute.

This mediation can last up to two (2) hours.

If the parties agree on a resolution, then that agreement can be documented by way of a formal agreement.

The mediator may assist by drafting a deed of settlement outlining the terms of the agreement, time for compliance, and anything else of concern.

If the matter does not settle at the mediation, then the employee must take legal action to recover the unpaid wages.

Commence Legal Action in the Court with Jurisdiction

Legal action for wage theft can be broken down into two (2) separate parts, namely:

  1. Claims under $20,000.00; and
  2. Claims over $20,000.00.

Small Claims Under $20,000.00

A claim under $20,000 is called a small claim.

Section 548 of the Fair Work Act 2009 (CTH) (“FWA”) confers jurisdiction on the Magistrates Court or the Federal Circuit Court if it relates to an amount that an employer was required to pay to, or on behalf of, an employee; and it is for an amount of $20,000 or less.

There are advantages and disadvantages in commencing action in this small claims jurisdiction.

Basically, he court is not bound by any rules of evidence and procedure and may act in an informal manner; and without regard to legal forms and technicalities.  This makes the process easier.

However, a party to small claims proceedings may be represented in the proceedings by a lawyer only with the leave of the court.  This means that if leave is not given, then the employee may have to appear on their own.

In Queensland this small claim in commenced in the Magistrates Court by way of Employment Claim. 

Queensland Industrial Relations Commission (QIRC) for a compulsory conciliation hearing in the first instance.

Once claim is filed, the Court will refer the matter to the Queensland Industrial Relations Commission (“QIRC”) for a compulsory conciliation hearing.  If the matter does not resolve by way of conciliation, then the proceeding will progress.

In the Federal Circuit Court a small claim is commenced by way of Form 5 – Small claim under the Fair Work Act 2009.

We strongly advise seeking legal advice before filing the small claim.

However, just because the amount is less than $20,000.00 that allows an employee to proceed as a small claim, but it does not compel an employee to.  An employee can commence as if it were a claim over $20,000.00.

Claims Over $20,000.00

Claims over $20,000.00 can be commenced in the Federal Court, the Federal Circuit Court, or an eligible State or Territory court.

Section 543(1) of the FWA says:

The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.

Section 543(2) of the FWA says:

Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:

(a)  an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;

(b)  an order awarding compensation for loss that a person has suffered because of the contravention;

(c)  an order for reinstatement of a person.

Section 545(3) of the FWA says:

An eligible State or Territory court may order an employer to pay an amount to, or on behalf of, an employee of the employer if the court is satisfied that:

(a) the employer was required to pay the amount under the FWA or a fair work instrument; and

(b) the employer has contravened a civil remedy provision by failing to pay the amount.

Remember section 45 of the FWA is a civil remedy provision.

Therefore, the Federal Court, and the Federal Circuit Court have jurisdiction to make an order awarding compensation for loss that an employee has suffered because of the contravention of section 45 of the FWA, or the contravene of a term of a modern award.

Further, eligible Queensland State Courts also have jurisdiction to hear claims for wage theft and can make an order the employer to pay an amount to the employee for unpaid wages.

But what is an eligible State or Territory court?

Eligible State Courts for Wage Theft Claims

Section 12 of the FWA defines “eligible State or Territory court” to mean one of the following courts:

(a) a District, County or Local Court;

(b) a Magistrates Court;

So, for a proceeding for unpaid wages, the matter can be commenced as a general claim in the Magistrates Court and the District Court.

Jurisdiction of the State Courts

The State Courts have a monetary jurisdiction in the following amounts:

  1. The Magistrates Court – up to $150,000.00;
  2. The District Court – from $150,000.00 to $750,000.00.

It would not be usual for an employee to be owed more than $750,000.00 in stolen wages.

Is the Business Owner Liable for the Debts?

Yes.  The director of the company or the any person involved in the contravention can be personally liable for the contravention.

Section 550(1) of the FWA says:

A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.

It then goes on to define what being “involved in a contravention” means.  Section 550(2) says:

A person is involved in a contravention of a civil remedy provision if, and only if, the person:

(a)  has aided, abetted, counselled or procured the contravention; or

(b)  has induced the contravention, whether by threats or promises or otherwise; or

(c)  has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or

(d)  has conspired with others to effect the contravention.

In Fair Work Ombudsman v Quincolli Pty Ltd & Anor [2011] FMCA 139 Driver FM said:

The authorities show that in order for a person to have accessorial liability under … 550 of the Fair Work Act, he or she must be a knowing participant or in other words:

a. must have knowledge of the essential facts constituting the contravention;

b. must be knowingly concerned in the contravention;

c. must be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting the contravention – although constructive knowledge may be sufficient under s.728(2)(c) in cases of wilful blindness; and

d. need not know that the matters in question constituted a contravention.

So, if these things can be proven, then the employee may obtain judgment against the person (or people) involved in the contravention.

Once an employee commences legal action in the Courts against the company, the business, and against a person involved in the contravention, the objective is to obtain from the Court a judgment or enforceable money order against them.

Once you are given judgment, and the debtors still do not pay, you can enforce that order over the property of the enforcement debtors.

Enforce the Wage Theft Judgment

This website has a lot of information of enforcement.

If you have judgment on a company, then you can:

  1. Enforce with an enforcement warrant; or
  2. Serve a statutory demand.

If you have a judgment against a person, then you can:

  1. Enforce with an enforcement warrant; or
  2. Serve a bankruptcy notice.

Read the articles below in relation to enforcement of money orders.

Moving Forward – Wage Theft

Employees have a right to claim their wages for up to 6 years after the amount became due and payable.  This is the limitation period and it cannot be extended.

If you have a claim for wage theft, or unpaid entitlements then contact us today.

If you have not been paid your legal entitlements by your employer, including award rates, penalty rates, wages, and overtime – then you might have a wage theft claim against the employer

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Wayne Davis Lawyer Sunshine Coast

Wayne Davis, LLB, GDLP – Commercial litigation solicitor and legal practice director at Stonegate Legal Pty Ltd. Stonegate Legal focus on commercial litigation, debt disputes, the enforcement of money orders, and insolvency. Committee member of the Sunshine Coast Law Association. Committee member and volunteer lawyer with the Sunshine Coast Community Legal Service.

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