Wage and Entitlement Claims

A. Introduction

What can you do if your employer owes you money?  Well, that depends on the nature of the debt and how long it has been owing.  Different legal avenues exist depending on whether your claim is for:

  1. Statutory, award or enterprise agreement based entitlements such as wages and annual leave;
  2. Contractual entitlements such as bonuses;
  3. Long service leave; or
  4. Superannuation.

All private sector employees have minimum entitlements under the Fair Work Act to not only the minimum wage but also to various forms of leave including annual leave and personal leave.  Employees who are covered by an industrial award may have higher or more detailed entitlements to award wages, including penalty rates and overtime and various allowances.

It is easiest to recover debts for these statutory/award/enterprise agreement minimum entitlements under the Fair Work Act and an applicable industrial award.  This means claims for unpaid leave, notice and redundancy pay and award based wages and allowances.  The Fair Work Ombudsman (“FWO”) website – www.fairwork.gov.au – can assist with finding out whether an award applies to your employment.

Claims for amounts above statutory/award/enterprise agreement minimums agreed in a contract of employment can also be made under the Fair Work Act as well as claims for commissions owing.  An award entitlement to commissions exists for real estate agents.  For other employees wishing to make a commissions claim based on their employment contract, these claims are commonly described as “contractual safety net entitlements”.

Claims for bonuses or other contractually agreed payments generally sit outside Fair Work Act based entitlements and are known as “common law” claims.

IN EACH CASE, THERE IS A TIME LIMIT OF 6 YEARS ON COMMENCING LEGAL ACTION TO RECOVER THESE PAYMENTS WHICH CANNOT BE EXTENDED.

A claim for long service leave can be included with one of the above claims or treated separately.  A claim for unpaid superannuation can also be made in certain circumstances.  Civil penalties for breach of legislative/award or enterprise agreement provisions can also be sought in some cases.  Penalty claims should usually be reserved for matters being pursued by your union or potentially for larger claims.

B. Recovery process

Any wage, leave or termination payment should be paid within the normal pay cycle or as specified in an applicable industrial award (which normally state a 7 day timeframe).  If this doesn’t occur, it is best to approach an employer about any non payment or under payment as soon as possible.  You shouldn’t let an employer put you off by repeatedly saying for example that the money will be paid “next week”.  Employers have statutory and award based obligations and failure to pay in accordance with these statutory requirements is a legislative breach for which a penalty may be imposed by a court in certain circumstances.

If you are having no luck through an informal approach, you should approach your union for assistance if you are a member.  If not, then it is time to put the matter in writing and ask for payment to be made within a specific time, usually a week or two.  If this doesn’t happen, you could then raise the matter with the FWO which is the relevant government agency (and not to be confused with the Fair Work Commission).  You can do this by telephoning the FWO or putting in a complaint form through their website – www.fwo.gov.au. Usually, the FWO will contact the employer on your behalf to ask them to look into the matter.  The FWO may also offer to conduct a mediation with the employer to resolve the matter although there is no obligation on the employer to participate in this process.  If the money is still not paid, then usually the FWO will not take legal proceedings on your behalf but will leave it up to you to take your own legal action.

A state industrial inspector may also be able to assist, particularly in the area of unpaid long service leave.  In Queensland, you can contact the Office of Industrial Relations – www.oir.qld.gov.au –  for assistance.  If compulsory superannuation payments are outstanding, you can make a complaint to the Australian Taxation Office and they will follow up the outstanding payment with the employer – www.ato.gov.au.  If these processes don’t work, you should seek legal advice about what to do next.  Your union may be able to assist if you are a union member.  You should be particularly careful if you are still working for the employer.  You don’t want to make a bad situation worse by continuing to work without getting paid but walking off the job is also a big decision to make.

So waht legal avenues exist if all other options have been exhausted?

C. Minor Claims in the Federal Circuit and Family Court of Australia (“Federal Circuit Court”)

If the amount claimed is based on a statutory/award/enterprise agreement entitlement or a contractual safety net entitlement and the amount is $20,000 or less, then you can make a claim to the Federal Circuit Court using its small claim procedures for industrial matters.  This involves a simpler process to the normal court procedure – leave is needed for legal representation and costs orders are usually not made.  You can find the necessary forms at ww.federalcircuitcourt.gov.au.  If the claim is over $20,000 then the normal Federal Circuit Court process and forms will apply.  You should seek legal advice before commencing a claim using standard Federal Circuit Court processes.  This process can also be used if amounts are claimed to be owing under casual conversion laws.

Under the Federal Circuit Court employment small claim process, it is necessary to file 2 forms to commence your proceeding in the Federal Circuit Court (these can be found on the court’s website):

  1. a general application form; and
  2. a small claim document.

Before commencing your claim you should make sure you have the correct name for your employer (your PAYG slip is a good place to look) and you should be clear about the calculation of what is being claimed and the nature of the amount claimed (ie award wage, annual leave etc).  If the entitlement falls under an industrial award or enterprise agreement, then you should print out the relevant provisions.  You can find industrial awards and enterprise agreements on the Fair Work Commission’s website (www.fwc.gov.au) or, for industrial awards, through the FWO’s website.  You should organise your supporting documents such as your employment contract, pay slips, annual PAYG certificate and time records as these are the primary documents to prove your claim.

The FWO has a pay calculator that can assist – http://www.fairwork.gov.au/pay-and-wages and will sometimes help with performing award/enterprise agreement calculations of moneys owing.  It is worthwhile to have a solicitor review your draft documents before they are filed to make sure they are correct and your claim is as straightforward as you think it is.

You will need to file the original documents in the nearest Federal Circuit Court registry to you and then serve a copy on the employer.  You should keep at least 2 copies of the documents for yourself.  If the employer is a company, the service copies of the documents can be sent in the ordinary post to the employer’s registered office or principal place of business (HINT: you can perform a company search to check these details on www.asic.gov.au).  However, if the employer is a sole trader, then the documents will need to be served personally on the employer.  You should consider engaging a professional process server to do this for you to avoid a potentially nasty confrontation.  You may need to file an affidavit of service, particularly if the employer does not respond to the claim and you wish to seek a default judgment.

A registrar of the court will usually direct that the claim be referred for mediation before any hearing and may make orders (directions) for the filing of affidavits of evidence by both sides either before or after mediation.  This process may take several months after filing your claim.  Mediations are usually conducted by volunteer lawyer mediators.  You should prepare a short summary of your basis for claim and have a detailed document setting out your calculations for the mediation in an easily understandable manner.  The summary document should ideally contain:

• The names of the employee and employer, dates of employment, nature of employment (full time, part time or casual) and job title;
• The name of the modern industrial award or enterprise agreement, if any, which applies to the employment;
• The appropriate job classification and wage rate payable under the modern industrial award (bearing in mind award rates are updated each year, usually from 1 July so this might change from year to year) or enterprise agreement;
• Details of award/enterprise agreement overtime/penalty rate/allowance requirements. The Fair Work Ombudsman’s Pay and Conditions Tool can help with this – www.calculate.fairwork.gov.au. Fair pay guides setting out pay details for each award classification can also be accessed at https://www.fairwork.gov.au/pay-and-wages/minimum-wages/pay-guides;
• A table with columns for each day and/or week that there is an alleged underpayment, the hours worked on that day/week, the hourly rate which was paid and the rate that should have been paid under the award/enterprise agreement and the applicable allowance. Starting and finishing times will also be important for overtime/penalty rate claims. Sub totals for weeks and years may be necessary. The Fair Work Ombudsman’s Small Claims Guide gives an example – https://www.fairwork.gov.au/sites/default/files/migration/712/small-claims-guide.pdf
• If the claim is for leave, then a calculation should be set out of the full number of days/weeks entitlement to leave, the amount of leave taken and when, the amount of leave paid for and the amount said to be owing;
• If the claim is for termination notice pay or redundancy pay, then the number of weeks pay claimed and the basis of the entitlement (enterprise agreement, National Employment Standard or contract) should be identified;
• Particular care needs to be taken in identifying the entitlement source and calculation of unpaid commission claims;
• Where an over award or pure contractual claim is made (eg reimbursement of relocation expenses or bonuses) then the contract provision should be identified.

At a mediation, you will have an opportunity to make these points briefly.  You should be prepared to listen to the points made by the employer, even if you don’t agree with them.  The employer may make an offer to pay some money to you rather than the whole amount and you may need to make a decision whether to accept an up front payment for a smaller amount to resolve the matter or continue on to a full hearing of the claim, which may take some months.

If you reach agreement with the employer, then a settlement agreement will usually be prepared by the mediator, the essence being that you will accept the payment by the employer in full and final settlement of your claim and will withdraw your Federal Circuit Court claim.  Sometimes the employer may agree to a consent judgment being made by the court.  The employer should agree to make the payment within 7 days (or 14 at most – it is usually inadvisable to agree to longer periods or accept payment by instalments due to uncertainty of payment).  If the employer breaches the settlement agreement by not paying the agreed amount, you may not be able to reinstate your Federal Circuit Court claim and may be left with commencing a claim in the state Magistrates Court for the breach of the settlement agreement.

If a mediation does not occur or is not successful, then you will be referred back to the court and the registrar will probably convene a directions hearing to ensure all documents have been filed for trial purposes.  The matter will then be listed for a date of hearing before a registrar or judge.  You should obtain advice to help you prepare for a hearing, whether from your union, a community legal centre or a private solicitor.  A decision may not be made on the date of the hearing and you may need to wait some weeks or months for a formal decision to be made by the court.  If you are unhappy with the registrar’s decision, a review can be sought from a judge of the court.  It is usually necessary to seek this review within 21 days of the decision.

D. Claims in the Queensland Industrial Magistrates Court

An alternative is to make a claim for Fair Work Act statutory/award/enterprise agreement or contractual safety net entitlements in the Queensland Industrial Magistrates Court.  A Fair Work Claim application can be downloaded at www.qirc.qld.gov.au and lodged in person or by email.  These claims are referred to an Industrial Commissioner or the Deputy President of the Queensland Industrial Relations Commission who will conduct a mediation of the parties to try and reach resolution.  Mediation is voluntary so the employer will not always agree to participate.  If the mediation is not successful, the matter will be referred back to the Industrial Magistrates Court for hearing.  The court will use a simplified process for small claims of up to $20,000 for private sector workers which allow the court to dispense with the rules of evidence and conduct proceedings informally.

Claims can also be made for amounts over $20,000 using this process although more formal hearing procedures may apply.  This process has the advantage that it is generally quicker than the Federal Circuit Court process and a conference is held with an Industrial Commissioner or the Deputy President of the Queensland Industrial Relations Commission who holds the status of a judge.

E. Claims in the Queensland (state) Magistrates Court

Another alternative is to make a claim to the Queensland Magistrates Court or local court in your state or territory as these courts can usually deal with these claims as well.  This avenue can also be used for solely common law based claims such as for bonuses.

This avenue should generally be restricted to larger claims as there is the potential for legal costs to be awarded against the losing party.  The process is more drawn out and complex than the processes set out above and legal advice should be obtained before commencing a claim in the Magistrates Court.

F. Common law claims

If the amount claimed arises from your employment contract, such as above award wages/salary or commissions, then you may be able to bring a claim using one of the above avenues.  Alternatively, in Queensland, an employment claim of up to $150,000 can be made in the Queensland Magistrates Court using a simplified procedure called a “Part VA” claim or “employment claim” if the employee earns less than the high income threshold prescribed by the Fair Work Act AND the amount claimed arises out of the employment contract.  This can also include other amounts that do not have a basis in statutory/award/enterprise agreement entitlements such as bonuses.  This process cannot be used for claims for solely statute/award/enterprise agreement based amounts.

This avenue is preferable to the standard Magistrates Court process because once the claim is filed, it is referred to the Queensland Industrial Relations Commission for a conference to be held with an Industrial Commissioner, usually on a face to face basis.  This is usually very helpful in resolving the matter as the Commissioner can bring their experience and authority to bear.  If the claim is not resolved at the conference, it will be referred back to the Magistrates Court and will proceed to hearing.  Again, legal representation is not usually permitted and costs orders are not usually made.

If the amount owing is solely for a bonus, you may not be able to bring this claim in the Federal Circuit Court or Industrial Magistrates Court and the employment claim process in the Queensland Magistrates Court may be the best avenue.  Each state has a similar process.

In Queensland, a claim for a purely common law contract amount may also be made to the Queensland Civil and Administrative Tribunal (“QCAT”) – www.qcat.qld.gov.au – as long as the claim is less than $25,000.  Note however that QCAT cannot deal with statutory/award/enterprise agreement entitlement claims.  A claim by a contractor can be made to QCAT as long as the claim is below $25,000.

G. Unpaid superannuation

If you are an award covered employee, you may be able to bring a claim in the Federal Circuit Court for unpaid superannuation.  Alternatively, a claim can be made to the Queensland Industrial Magistrates Court or equivalent court in your state or territory.

So, if your claim is for unpaid wages, annual leave or other entitlements under the Fair Work Act or an industrial award/enterprise agreement or contractual safety net entitlement like commissions, you can bring a claim in either the Federal Circuit Court or a state Industrial Magistrates or Magistrates Court.  It is advisable to use the simple procedure in either court if you are able.  Otherwise, the normal procedures of the courts will apply.  If the claim is solely for amounts not based in statute/award/enterprise agreement, like bonuses, you may have no option than to bring the claim in the Magistrates Court.

H. Long service leave

The exception to the above rules concerns long service leave.  The state and federal governments have not yet been able to agree on a common set of rules for long service leave across the country and the rules about long service leave can differ from state to state.

A claim for unpaid long service leave can be made in the Federal Circuit Court but can also be made in the state industrial relations commission (so in Queensland, this is the Queensland Industrial Relations Commission).  Due to the delays which can be encountered in the Federal Circuit Court, bringing a claim for unpaid long service leave in a state industrial relations commission with jurisdiction (this may differ from state to state and territory) is usually more advisable.

I. Wage theft

Wage theft is a criminal offence in several states.  In Queensland employers engaging in deliberate wage theft from their employees may be imprisoned for up to 10 years.  To successfully charge an employer with the offence of stealing, the employer must be shown to have intentionally withheld an employee’s entitlements.  If you believe that your employer’s conduct could be a crime, you can find further information on the Queensland Police Service (“QPS”) website – www.police.qld.gov.au – along with a wage theft report form (which is also available in person at a police station).  You should be aware that:

  1. making a wage theft complaint to police may not result in the recovery of your unpaid wages or entitlements, even if your employer is convicted of stealing; and
  2. you may be required to provide evidence during the investigation and prosecution processes of a criminal complaint, including potentially appearing in court as a witness.

J. What happens if the Employer can’t or won’t pay?

Even if you obtain a judgment against an employer, this is no guarantee of payment.  If the employer does not pay the judgment voluntarily, you may need to take steps to enforce the judgment (for instance by requiring the employer to come to court to answer questions about its financial situation or by seizing and selling assets).  This is a complicated area and you should obtain professional advice before attempting to enforce a judgment.

What happens though if your employer goes into administration or liquidation?  You may be able to recover your minimum statutory/award/enterprise agreement entitlements through the federal government’s Fair Entitlements Guarantee (“FEG”) scheme.  If your claim arose in the previous 12 months and the employer has either gone into administration or liquidation, you can make a claim.  The amounts you can claim are limited to:

  1. Up to 13 weeks unpaid wages;
  2. Unpaid annual leave and long service leave;
  3. Up to 5 weeks pay in lieu of notice;
  4. Up to 4 weeks per year of service for redundancy pay.

More details and online claim forms can be found at https://www.employment.gov.au/fair-entitlements-guarantee-feg.

The information in this section is tailored for employees who work in Queensland and individual advice should be sought if a claim is being made by an employee working in another state or territory.