'Regardless of financial situation, employees' pay must be a priority,' says court
The Federal Circuit and Family Court of Australia (FCFCOA) recently dealt with a case involving two workers who claimed their employer failed to pay their leave entitlements.
In its defence, the employer stated that it had lost a significant amount of money because of the COVID-19 pandemic. Nonetheless, the Fair Work Act requires every employer to pay the appropriate entitlements to its employees.
No paid leave entitlements
The first worker who was allegedly underpaid worked as the senior waiter for the employer’s restaurant from 13 January 2014 until 22 November 2020.
Meanwhile, the second worker performed the role of restaurant manager at the same restaurant from 2 September 2019 to 22 November 2020.
The economic loss of the company started when around March 2020, the government announcements forced the closure of several restaurants, including that of the employer, to ensure that COVID-19 did not spread.
While the Federal Government introduced the JobKeeper payments for select businesses, the assistance was still not enough for the many businesses in the hospital industry to survive.
Around November 2020, the employer decided that he was going to have to close the three restaurants that he owned. Hence, the employment of the two workers ceased.
“He [employer] said that he was reviewing the financial position of the companies and looking at all current staff entitlements and that he would be in touch with staff in the future regarding that aspect,” the FCFCOA stated.
In assessing the staff entitlements, the employer paid the senior waiter a sum that equated to 200 hours in notional long service leave. The Court stated that this was an amount to which the worker did not have a statutory entitlement.
However, it was noted in the case that both workers were not paid for their unused annual leave. The first worker had leave totaling 287 hours which amounted to $7,483 and the second worker had leave of 179 hours, amounting to $7,266.
“According to s 90(2) of the FW Act, if, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave,” the Court stated.
HRD previously reported about an employee who was dismissed for misconduct because he was held “negligent” and “careless” after approving overtime payments to a worker who was not entitled to them.
Court’s decision
Ultimately, the Court found that the employer indeed contravened the Fair Work Act by failing to pay the workers their leave entitlements. Hence, it ordered the employer to pay the appropriate sum to the workers.
The FCFCOA noted that although the employer attempted (albeit mistakenly) to give the senior waiter her entitlements given that she had been in the company for over six years, the amounts that were not paid to the two workers were substantial which warrants the need to impose a pecuniary penalty.
Hence, the Court also ordered the employer to pay a penalty of $15,000 in the case of the restaurant manager and $5,000 in the case of the senior waiter.
“It is important for the Court to send a message to all employers, regardless of their financial situation, that they must ensure that the entitlements of employees are given absolute priority,” the FCFCOA noted.
