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Underpayment of Wages 

Everyone deserves an honest wage for an honest day’s work. Unfortunately, some employees don’t get what they deserve. Whether that wage discrepancy is deliberate or not, all workers are protected under Australian law which provides avenues to claim back wages and entitlements that haven’t been paid.  

I don’t think I am being paid properly. What can I do? 

In Australia every worker is entitled to be paid a minimum wage for their work. Underpayment of staff can be caused by a simple error while others are intentional and often referred to as wage theft. All employers need to be aware of and adhere to the minimum entitlements of their employees. If you think you have been underpaid, employees have a number of options.If it is an honest mistake, employees should talk to their employer first to see if the underpayments can be rectified. If you have no success with this method, you should talk to one of the experienced employment lawyers at Fourtree Lawyers on the best way to proceed.

What can I do if I am deliberately underpaid at work?

Unfortunately, some employers take advantage and deliberately underpay vulnerable workers. The team at Fourtree Lawyers understands that wage theft is a major stress for workers. Sometimes a well-drafted letter is enough to get results or our experienced employment lawyers can help you deal with the Fair Work Ombudsman, which will take further action. If all this fails, you can commence court proceedings to seek back pay, additional compensations such as interest and civil penalties including fines from $18,780 to $187,800.

What is underpayment of wages or wage theft? 

An underpayment of wages occurs when an employee has not been paid the minimum entitlements stipulated by the National Employment Standards (NES), modern award or enterprise agreement. This includes pay, hours of work, breaks, allowances, penalty rates, superannuation and overtime. 

Underpayments may occur because of a payroll mistake, an error in the calculation of hours, entitlements or overtime rates, or an intentional underpayment of wages. 

How do I know if I've been underpaid at work? 

There are a few ways to find out if you are being underpaid:

    1. You can compare your salary to the current minimum wage and hourly rate stipulated in the relevant award or if your terms of employment are contained within an enterprise agreement, you need to refer to this agreement to review the rates and entitlements.  
    2. You can look up award rates using the Fair Work Ombudsman’s Pay Calculator or check out enterprise agreements on the Fair Work Commissions Find an Agreement website. 
    3. Your entitlements are below the minimum standard as provided by the national employment standards

What do I need to do if I have been underpaid at work?

Once you have determined if your pay rate and entitlements are less than the enterprise agreement or national employment standards, you are entitled to seek back pay and other entitlements. 

You should arrange a time to discuss the underpayment with your employer to determine whether this was a genuine mistake that can be quickly resolved, or if this was an intentional action. 

If your employer has been intentionally underpaying employees, it is time to consult an employment lawyer at Fourtree Lawyers to receive clarification and guidance and complete a formal written request to repay the difference to resolve the situation. 

Once the above avenues have been exhausted, a claim may be submitted to the Fair Work Ombudsman to arrange for rectification. The Fair Work Ombudsman may then recommend an Assisted Voluntary Restitution. This will provide both parties with up to 40 working days to come to an agreement for the repayment of wages or entitlements. Fair Work Australia may then determine that a full investigation is necessary to resolve all potential issues, and litigation may be an option. 

If the Fair Work Ombudsman is unable to assist, you may commence proceedings in court which can seek additional remedies such as interest and civil penalties. 

The Federal Circuit and Family Court of Australia has jurisdiction to hear underpayment claims up to $100,000 in the small claims division. 

What are the time limits to seek backpay if I have been underpaid at work?

There is a six-year limitation for any claim in relation to underpayments made from the date which the payment was due to be made. Each pay has a new limitation period so there may be the case that you could have some pay periods which you cannot claim due to the passage of time but other underpayments which were paid or due to be paid less than six years ago are able to be claimed. 

What if I do not know when I have worked?

It is a legal requirement that employers must keep all records involving pay (such as hours worked and payslips) and must make them available within three business days of a request being made or 14 days if the records are to be collected and posted.

Can I recover legal costs if I take my underpayment matter to court?

Ordinarily, legal costs are not able to be recovered in claims commenced under the Fair Work Act 2009 unless the claim is commenced or continued vexatiously or without reasonable cause. There are mechanisms to potentially make a claim for costs once proceedings have been commenced but you should seek advice from your lawyer to determine if a claim for costs is possible.

What are the penalties for underpayment of employees?

An employer failing to provide an employee’s minimum entitlements under the national employment standards, modern award or enterprise agreement can be taken to court for the wrongdoing. The maximum penalty from July 1,2023, is $18,780 per offence or $187,800 for a serious contravention per offence. 

What is the proposed Fair Work Legislation Amendment (Closing Loopholes) Bill 2023?

The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023, which is being debated in Federal Parliament as of November 11, 2023, has a number of amendments to the proposed penalties for employers who intentionally engage in conduct that results in the underpayment of wages to their employees. The offence will carry a maximum of 10 years’ imprisonment, and/or a maximum fine of the greater of:

  1. 3 times the amount of the underpayment, if the court can determine that amount, or 
  2. For an individual, 5,000 penalty units ($1,565,000), or for a body corporate, 25,000 penalty units ($7,825,000).

Employers will need to be hyper aware of their responsibilities if the closing loophole bill is enacted in legislation or they could risk significant costs of court proceedings, the imposition of penalties or imprisonment. 

If I am an employer, should I be worried if I have been underpaying my workers?

Absolutely. Besides having to repay wages and entitlements owed, you could be fined up to $187,800 for a serious contravention. If you are facing the prospect of being taken to court, or need help with the Fair Work Ombudsman you should call an employment specialist on 1300 529 444 as soon as possible.

We are here to help

Our solicitors specialise in Employment Law and represent clients throughout the Hunter, Newcastle, Sydney and across the Central Coast. We have the experience to guide you through often complex workplace issues from beginning to end to ensure you get you the best possible outcome.

If you have a workplace issue or dispute, contact one of our employment law specialists on 1300 529 444 or submit a contact form to arrange a case assessment with one of our solicitors today.





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