Underpayments of entitlements

Employee entitlements come from various sources, including industrial instruments, legislation, contracts of employment and policies.

See What entitlements do employees get?

Unpaid or underpaid employee entitlements commonly present in four typical scenarios:

• • failure to pay award entitlements;
• • the misclassification of an ongoing employee as a casual employee;
• • the misclassification of an employee as a contractor; or
• • an underpayment which arises as a result of an annualised salary arrangement.

See Typical scenarios leading to underpayments.

The provisions setting out employee entitlements in the Fair Work Act 2009 (Cth) are civil penalty provisions. Primary liability lies with the employer. However, persons involved in the contravention can be liable as accessories (including franchisors or holding companies). Where the liability relates to vulnerable persons and/or is particularly serious, penalties can be significantly higher.

The Fair Work Ombudsman (FWO), employer and employee representatives, employers and employees have standing to make an application for employee entitlements, which can be heard in the Federal Court, Federal Circuit Court and relevant State or Territory courts. Disputes under an award or enterprise agreement can be heard by the Fair Work Commission. Class actions to recoup employee entitlements for groups of employees are also becoming more prevalent.

See Process of enforcing entitlements under the Fair Work Act 2009 (Cth) — penalties, standing and jurisdiction, Class actions, The role of the Fair Work Ombudsman (FWO) and Actions by individuals or employee representatives.

There is ongoing debate across jurisdictions about whether serious underpayment contraventions should be classed as criminal contraventions or as commonly referred to “wage theft”.

See Current developments in this area.