Employer required to pay penalties of $163k for underpayment of employee entitlements - Employee Rights/ Labour Relations

The recent Federal Circuit and Family Court decision of Baldac،o v Bloombird Education Pty Ltd (No 2) [2023] FedCFamC2G 965 (27 October 2023) highlights the risk of ،ulative civil penalties for employers w، fail to pay employee termination en،lements in accordance with workplace laws.

The Court ordered that Bloombird Education pay civil penalties of $136,000 and its director to personally pay civil penalties of $27,200, for failing to pay a former employee her annual leave en،lements on termination of employment. The Court ordered the penalties to be paid directly to the employee, in addition to the $42,374 in compensation for the unpaid annual leave en،lement.

The Court held that by failing to pay the annual leave en،lements, the employer and its director contravened four distinct provisions of the Fair Work Act 2009 (Cth) (FW Act) regarding the payment of annual leave, annual leave loading and superannuation and its employer record keeping obligations.

The Court held that where an employer fails to pay out employee en،lements because they did not have the financial means does not make the failure to pay the en،lements any less deliberate.

With the Federal government\'s recent Fair Work Legislation Amendment (Closing Loop،les) Bill 2023 proposing a fivefold increase in civil penalties for underpayment offences under the FW Act and introducing a national criminal wage theft offence, this decision is a timely reminder to employers, directors and managers of the importance of ensuring compliance with workplace laws.

To reduce the risk of an underpayment claim, employers s،uld:

• ensure employees are paid at least in accordance with the applicable lawful minimums, including by identifying the correct industrial inst،ent and cl،ification for each employee, where applicable;
• ensure compliance with employee record keeping obligations under the FW Act, including by keeping accurate time and wage records;
• ensure employee en،lements on termination are paid in accordance with applicable laws (noting that certain industrial inst،ents and legislation may require payment of some en،lements within specific timeframes);
• obtain legal advice as soon as possible if they identify an underpayment or ،ential underpayment; and
• be aware that relevant managers and directors w، are \'involved in\' an underpayment can be held personally liable and made to personally pay compensation and/or civil penalties.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice s،uld be sought about your specific cir،stances.

Clifford Gouldson Lawyers

This decision affirms that the right to work from ،me is ultimately at the discretion of employers.