Enforcing your entitlements as an employee
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An employee who has a dispute with an employer about an entitlement under an enterprise agreement, an employment contract, or the relevant modern award should first raise the matter with the employer, or ask their union to do so. If the matter cannot be resolved informally, the following steps could be considered.
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The Fair Work Act 2009 (Cth) (‘FW Act’) empowers inspectors appointed at the Fair Work Ombudsman to investigate breaches of modern awards and enterprise agreements. If, on investigation, an inspector considers that there has been a breach of an enterprise agreement or award, they usually require the employer to rectify it. If the employer fails to take any specified remedial steps, the inspector may then prosecute the employer. Employees are protected from discriminatory action taken against them as a result of making these reports. However, employees will often seek to recover identified underpayments personally, or by commencing civil proceedings (see below).
Civil proceedings
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An employee or union covered by either a modern award, enterprise agreement or collective agreement, or by the National Employment Standards (NES) (see ‘National Employment Standards’ in Chapter 11.5: Employment contracts, awards and agreements), may bring proceedings against an employer that is in breach of those instruments and obtain orders. If successful, an employee or union can obtain orders for, among other things, the recovery of any underpayments or entitlements, and financial penalties for failure to comply with the modern award or enterprise agreement (FW Act ss 44, 45, 50, 539, 540). The claim must be filed within six years from the date payment was due. The FW Act imposes maximum penalties for breaching a modern award, enterprise agreement or the NES. Current penalties are: $18 780 per contravention for an individual $93 900 per contravention for a company with less than 15 employees; $469 500 per contravention for a company with 15 or more employees. The maximum penalties will increase on 6 November 2024 to $19 800 and $99 000 respectively.
Where an employer has knowingly or recklessly caused a contravention, the maximum penalties are increased tenfold to $198 000, for individuals, and $990 000, for corporations.
Proceedings in relation to breaches of an enterprise agreement may be brought in either the Federal Circuit and Family Court of Australia or Federal Court. Where the proceedings involve an application for an injunction to prevent, stop or remedy the effects of a breach, the applicant must apply to the Federal Circuit and Family Court of Australia or the Federal Court (FW Act s 545).
As a general rule, parties must pay their own legal costs; however, a party might be ordered to pay another party’s costs if it can be shown that:
the proceedings were brought vexatiously, being without reasonable cause (FW Act ss 570, 611); or
a party’s unreasonable act or omission caused the other party to incur costs; or
a party unreasonably refused to participate in a matter before the Fair Work Commission (FWC) that was related to the
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An employee with a specified entitlement under an employment contract, and who has been underpaid in breach of that employment contract, may take action to recover that entitlement (such as underpaid wages) as a contractual debt. In this situation, an employee is commencing legal action to require compliance with the terms and conditions of the contract of employment, rather than in breach of an award or enterprise agreement (which might be a lower entitlement than that provided in the employment contract). Saying this, an employee can also proceed in this manner to recover an entitlement under a modern award where a term of the employment contract refers to the entitlement under the modern award.
Proceedings for the recovery of a contractual debt are usually commenced in the Magistrates’, County, or Supreme Courts, depending on the amount in dispute (see Chapter 1.2: An introduction to the courts). A claim may also be brought in a federal court if it is an ‘associated claim’(for example, an employee wishes to recover a contractual debt in addition to pursuing a breach of the NES). Proceedings may be brought up to six years after the date payment was due.
If no wage rate is fixed or agreed, the employee can sue for a reasonable price for the services rendered once the contract has been terminated.
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Under section 548 of the FW Act, employees can choose to take their own legal action to recover employment entitlements – up to a maximum amount of $100 000 – using the small claims procedure.
The small claims procedure is quicker, cheaper and more informal than regular court proceedings. The aim of the small claims procedure is to settle disputes quickly and fairly with minimal expense to the parties. Matters are usually resolved with only one hearing, and rules of evidence and procedure are limited. The simple process means there is usually no need for the involvement of lawyers.
For more information about making a small claim, see the Fair Work Ombudsman’s guide Taking legal action in the small claims court at www.fairwork.gov.au/workplace-problems/fixing-a-workplace-problem/resolving-disputes-with-our-help/legal-action-in-the-small-claims-court.
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When an employer becomes insolvent and enters either liquidation or bankruptcy, an employee’s wages and entitlements are protected by virtue of the Fair Entitlements Guarantee Act 2012 (Cth) (‘FEG Act’). This legislation regulates the Fair Entitlements Guarantee Scheme (FEG Scheme), which is administered by the Commonwealth Attorney-General’s Department and applies to the employees of an employer who has become bankrupt or entered liquidation on or after 5 December 2012.
Decisions made under the FEG Scheme can be reviewed internally (FEG Act s 38) and externally by the Administrative Review Tribunal (FEG Act s 40). For more information about the scheme, see www.dewr.gov.au/fair-entitlements-guarantee.
Key legislation
Chapter: 11.6: Protection for your rights at work
Contributor: Alexander Lanham, Lawyer, and Samara Jones, Lawyer (Workplace Relationships and Safety), Lander & Rogers
Current as of: 1 September 2024
Law Handbook Page: 964
Next Section: Termination of employment
