Underpayment of wages

What are my rights if I am being underpaid at work?

With the increasing number of recent cases publicised regarding wage theft across various industries in Australia, it is important that all employees know their workplace rights and entitlements. This is particularly relevant to wage rights including any underpayment of wages.

In 2018-2019 alone, over $4.4 million in court-ordered penalties for breaching Fair Work Act provisions was recorded by the Fair Work Ombudsman.

What award am I covered by?

Awards provide entitlements such as pay rates, leave entitlements, overtime and other terms and conditions of employment. Not every worker is covered by an Award.

There are 122 Modern Awards which provide minimum entitlements across various industries in Australia. Modern Awards are based on the industry you are employed in and the roles and duties you are required to perform in your substantive role.

A full and comprehensive list of all Modern Awards is accessible through the Fair Work Commission’s website. If you have any uncertainty about your award, you should seek advice from your union or a solicitor.

What do I do if I am not being paid my entitlements under my award or contract?

If you believe you are not receiving accurate entitlements in accordance with your Award, employment contract or the National Employment Standards, you should first exercise all internal avenues to resolve the issue informally with your employer. You may wish to contact your Human Resources department for the appropriate policies and/or procedures in respect to raising a grievance or complaint.

In raising your complaint with your employer, you should always do so in writing. The complaint should carefully set out your entitlements by reference to the NES and award as appropriate. Your union may be able to assist you with that process.

It is important that you calculate the sum you believe you have been underpaid. In doing so it is important to consider the following:

  1. How much you have actually been paid – check your pay advices/payslips to confirm this;
  2. How much you ought to have been paid in accordance with your contract of employment or the applicable Award;
  3. How long you have been underpaid.

The calculation of entitlements can sometimes be a complicated process. For that reason, it is often advisable that you seek advice, whether from your union or an expert employment solicitor. They can also investigate if colleagues (other employees) have also been underpaid.

If the matter cannot be resolved with your employer directly, the next step is to send a formal Letter of Demand to your employer. Should you not receive payment of the outstanding entitlements from your employer within the timeframe set out in the letter of demand, you will be able to initiate court proceedings without further notice to them. Hall Payne Lawyers regularly assists employees with this stage of wage recovery.

Suing for a breach of award or employment contract

Once you have exhausted all other processes without success, the next step is to consider, and if necessary, commence court action.

In the first instance, you must ensure you are making your claim within the statutory limitation of six years from the date of the underpayment.

The court process can be slow and complex. If you are within the required time limitation and your claim is under $20,000, you will be eligible to make a claim in the small claim’s jurisdiction of the Federal Circuit Court. Regardless, it is still a good idea to seek advice about your entitlements and the process moving forward.

If you do want to commence the proceedings, an Application is required to be filed with the Court Registry. This Application will have certain content requirements. After the application is filed, your employer will be required to file a response in the matter.

Mediation will ordinarily be facilitated when making a claim in the small claim’s jurisdiction. The aim of mediation is to reach a settlement position with the consent of both parties.

If a settlement is reached, a formal settlement agreement will be drafted which stipulates the sum to be paid to the employee and a timeframe that these monies must be paid.  Each party will be required to sign the settlement agreement. The settlement agreement should be a legally binding document.

If a settlement is not reached at mediation, the matter will be listed for a final hearing, in which case a judge will decide the outcome of the matter. The decision may be delivered on the day of the hearing or reserved for some months.

What are the penalties for breaching the award and/or an employment contract?

Pursuant to Section 539 of the Fair Work Act (2009), there are civil penalties which may be imposed in circumstances where provisions of the Fair Work Act have been breached.

In circumstances where the court orders penalties, the following maximum penalties are available for an underpayment matter:

  1. Penalties of up to $12,600 per contravention for an individual, resulting from 60 penalty units (A penalty unit is equivalent to $210 by virtue of the Crimes Act 1914 (Cth) s.4AA ); or
  2. Penalties of up to $63,000 per contravention for a body corporate, resulting from 5 x 60 penalty units.

The court may order penalties for a contravention against both an individual and body corporate in the same matter. The court may also order that the penalties be paid to the employee. No penalties are available via the small claims proceeding; the case must instead be commenced in the usual jurisdiction of the court.

In circumstances where it is determined that there has been a serious contravention of the Fair Work Act, greater penalties may be ordered by the court.

What is a serious contravention under the Fair Work Act?

Under Section 557A of the Fair Work Act (2009), a serious contravention will have occurred where:

  1. a person knowingly contravened the provision; and
  2. the person’s conduct constituting the contravention was part of a systemic pattern of conduct relating to one or more other persons.

If it is deemed that there has been a serious contravention, the maximum amount of penalty units that may be ordered is 600, resulting in the following potential civil penalties:

  1. penalties of up to $126,000 per contravention for an individual; or
  2. penalties of up to $630,000 per contravention for a body corporate.

The penalty that a court orders may be paid to the Commonwealth, an organisation or an induvial.

Compensation and interest for underpayment of wages

It the court determines that there has been a breach of a provision of the Fair Work Act, the court may make orders which award compensation to the employee for any loss suffered.

In doing so, the court may also impose interest. The amount of interest imposed will be at the discretion of the court when making the final orders.

Get help

If you believe you have been underpaid, or are looking for advice in relation to any employment law matters, please contact a Hall Payne Lawyers employment law team member for expert advice and guidance.


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Get in touch with today's blog writer:
Jennifer Diplock

Solicitor in Industrial & Employment Law

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