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 for.
B. Statutory Entitlements
It is easiest to recover debts for minimum entitlements under the Fair Work Act. This means claims for unpaid annual leave, notice and redundancy pay and award based wages and allowances. In each case, there is a time limit of 6 years on commencing legal action to recover these payments.
Any wage, leave or termination payment should be paid within the normal pay cycle. 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.
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. If this doesn’t happen, you should seek legal advice about what to do next 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.
You could then raise the matter with the Fair Work Ombudsman (“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 (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.
C. Minor Claims in the Federal Circuit Court
If the amount claimed 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 www.federalcircuitcourt.gov.au. If the claim is over $20,000 then the normal Federal Circuit Court process and forms will apply.
- a general application form; and
- 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, then you should print out the relevant award provisions. You can find industrial awards on the Fair Work Commission’s website (www.fwc.gov.au) or 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.
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.
The matter will be set down for a first directions hearing before a Federal Circuit Court judge, usually within 1 -3 months after filing the documents. The employer should file a defence to the application before the first court date.
At this initial hearing, you should be ready to give the judge a brief overview of the amount claimed and its nature and when the money became owing. The judge may offer the parties the opportunity to attend mediation through a voluntary mediation service which operates in most centres. This usually occurs if it appears that there is some prospect of agreement being reached between the parties. As an applicant, you should take up any offer of mediation as it might help to shorten the proceedings.
At a mediation, 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. The employer should agree to make the payment within 7 days (or 14 at most – it is usually inadvisable to accept payment by instalments). 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 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 judge will probably make orders about the filing of written evidence and supporting material. Depending on the detail in your application, you may need to file a formal affidavit setting out the details of your claim and attaching primary supporting documents. The employer will have to do the same.
The matter will then be listed for a date of hearing before a 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.
D. Magistrates Court Employment Claims
As an alternative, a claim can be made to the state magistrates court or local court in your state or territory as these courts can usually deal with these claims as well.
In Queensland, employment claims cannot be made to the Queensland Civil and Administrative Tribunal (“QCAT”). A claim by a contractor can be made to QCAT as long as the claim is below $25,000.
In Queensland, an employment claim up to $150,000 can be made in the Magistrates Court using a simplified procedure if the employee earns less than the high income threshold prescribed by legislation.
The major benefit of commencing an employment claim using the simplified procedure under Part VA of the Magistrates Court 1921 (Qld) is that 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.
Alternatively, the standard Magistrates Court process can be used which is more detailed and allows the use of lawyers and the benefit (and potential disadvantage) of a costs order against the losing party which will help offset some of the legal costs involved.
E. Other Types of Wage Claims
If the employment contract provides for a greater period of notice or annual leave than the minimum statutory requirement, you may still be able to bring the claim in the Federal Circuit Court.
However, if you are owed money for commission or bonuses, then you may not be able to bring a claim in the Federal Circuit Court. This type of claim needs to be commenced in a state magistrates court or one of the other state civil courts depending on the amount in question and whether you have a joint claim for statutory entitlements. This also applies to other contractual incentives and other payments which are not in the nature of notice or leave.
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. There is little practical legal action open to you as an individual to force the employer to pay compulsory superannuation.
So, if your claim is for unpaid wages, annual leave or other entitlements under the Fair Work Act or an industrial award, you can bring a claim in either the Federal Circuit Court or a state 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 things like commission or bonuses, you may have no option than to bring the claim in the Magistrates Court.
F. 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.
G. 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 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:
- Up to 13 weeks unpaid wages;
- Unpaid annual leave and long service leave;
- Up to 5 weeks pay in lieu of notice;
- 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.