In April 2016, the Fair Work Ombudsman released a report following an inquiry into allegations of systemic underpayment of wages and falsification of employment records occurring across much of the franchisee network of 7-Eleven, Australia’s leading convenience retailer. The Inquiry found 7-Eleven failed to adequately detect or address deliberate non-compliance with the Fair Work Act 2009 (Cth) (‘the Act’) and Fair Work Regulations 2009. There were also instances of franchisees creating false and misleading records to satisfy 7-Eleven’s auditing and payroll team while continuing to underpay its employees. Penalties issued by the Federal Circuit Court against 7-Eleven operators have since exceeded $1 million.
The scandal is by far the highest-profile example of workers being underpaid in Australia. It also brought the widespread issue of underpayment at the hands of an employer into public scrutiny.
Underpayment of wages occurs where the employer is in breach of their obligation to pay the minimum monetary amount that the employee is entitled to. This includes wages, allowances or penalty rates prescribed by the relevant instrument, such as an award or statutory scheme.
Under the Act, an employee has the ability to take action against their employer in the event that there has been an underpayment of wages or entitlements.
Rights under the Act to recover unpaid wages or entitlements
An employee has a statutory right to recover an underpayment of wages and/or other entitlements under s 539 of the Act. Under this section, an employee may lodge a complaint with the Fair Work Ombudsman in respect to the above.
An employee can initiate legal proceedings to recover their outstanding wages and/or entitlements, although most claims would be made to the Fair Work Ombudsman. An employee who is a member of a union may also instruct their union to instigate a claim with the relevant court. Nevertheless, s 545(5) of the Act stipulates that an employee cannot bring proceedings against their employer if more than 6 years have passed.
What kind of claims for underpayment can I make to the Fair Work Ombudsman?
If an employee believes that their employer is not paying the correct minimum wages and conditions such as annual leave or personal/carer’s leave, he or she might make a complaint to the Fair Work Ombudsman. A workplace inspector will then investigate the complaint on the behalf of the employee.
Depending on the outcome of the Fair Work Ombudsman’s investigation, there are multiple outcomes or enforcement actions that may result from it. These include:
- The employer rectifying the issue;
- A letter or compliance notice from the Fair Work Ombudsman identifying the issues and asking the employer to fix them within 14 days;
- Alternative dispute resolution;
- A referral to the Small Claims Division of the Local Court;
- A letter of caution;
- A Penalty Infringement Notice;
- Seeking an injunction;
- Entering into an enforceable undertaking or;
Which courts can hear my case?
An employee or Fair Work inspector acting on his or her behalf may initiate proceedings for the recovery of payment in the Federal Magistrates Court or the Federal Court of Australia or an eligible state and territory court.
The Act stipulates that an ‘eligible State or Territory court’ can be one of the following:
- A District, County or Local Court
- A Magistrates court
- The Industrial Relations Court of New South Wales
- The Industrial Relations Court of South Australia.
What sorts of penalties can my employer expect?
If your employer is in contravention of the Act, they can face penalties of up to $6600 per contravention for an individual and $33,000 per contravention for a body corporate.
Talk to one of our specialists
If you think you may have been underpaid, you should contact our team of lawyers on 13 43 63 to discuss whether you may have a claim against your employer.
