News 7 November 2019

Further back-pay applicable on appeal: employer failed to keep records

The Federal Court of Australia (the “Federal Court”) has awarded two workers under the Hospitality Industry Award back-pay of more than $20,000 after an appeal was heard from the Industrial Magistrates Court of Western Australia (the “Magistrates Court”). The business, an accommodation provider, failed to keep any records, thereby breaching record keeping obligations set out by the Fair Work Act (the “Act”).

Overview of the facts

The employees worked and lived on site, as a cook and guest services worker, and were employed on a casual basis during December 2016 and January 2017. During proceedings in the Magistrates Court in 2017, the employees claimed they were not paid for their work. The business argued they were each paid $700 in cash and provided accommodation to off-set any additional payments. At the time, the employees submitted handwritten “schedules” of their hours of work based on their recordings from the time. The business was not able to produce any timesheets or records regarding the employees’ working hours. The original decision found the employees’ evidence regarding the hours worked lacked reliability and credibility, causing the Magistrates Court to form an independent view of the hours worked, and ordered $10,165 be based on the relevant award rates. The case progressed to the Federal Court on appeal, with the employees believing they were owed more.

The Decision

The decision by the Magistrates Court was overturned by the Federal Court. It was found the standard of proof under the Act was not properly applied in the initial proceedings. The Federal Court commented the Act states expressly the “defaulting employer bears the burden of disproving the allegation” where the employer has failed to keep proper records. This contrasts the initial application by the Magistrates Court who questioned the credibility of the employee’s evidence. This was seen as an incorrect application of the rule as the Federal Court found the business failed to disprove the allegations, therefore the back-pay ordered by the Magistrates Court was lower than what the employees were entitled to.

Commenting that the evidence provided by the business was “plainly insufficient”, the Federal Court ordered an amount of $21,314 to be paid to the two employees.

Lessons/Learnings

Businesses need to ensure they retain accurate records, including hours worked and payments made, and be aware that they bear the responsibility for disproving allegations of underpayment where they are not able to produce records.

How we can assist

The Workplace Relations Advice Line offers general advice on a range of workplace issues, including:

  • Award interpretation, classification and minimum entitlements
  • Disciplinary processes, performance management and termination
  • Personal illness and injury
  • Parental leave and flexible working arrangements
  • Redundancy
  • Occupational Health and Safety and WorkCover.

For assistance on any aspect of your employment obligations, please call the Victorian Chamber Workplace Relations Advice Line on (03) 8662 5222.

Written by Janet Watt, Workplace Relations Advisor

[2019] FCA 1627

 

Media Contact

All media enquiries may be directed to the Media and Communications Manager

03 8662 5310

0423 883 945

media@victorianchamber.com.au

For all other enquiries please contact the Victorian Chamber on 03 8662 5333

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