Recent Federal Circuit Court (Court) decisions1 illustrate just how costly a failure to comply with minimum terms and conditions can be for an employer.

The employee commenced employment on a full time basis on 1 August 1994.

In January 2012, the employee suffered a workplace injury and made a claim under the New South Wales workers’ compensation legislation (Compensation Laws).

Compensation Laws provide that the employer was required to develop an injury management plan to assist the employee return to work.

On 18 June 2012 the employer informed the employee that from that point on he would be working only three days a week and would be paid $115 per day. The employee resigned soon after, with his employment ending on 1 July 2012.

After he resigned, the employee made claims in the Court against his former employer alleging he had been subjected to unlawful adverse action and had been underpaid by reference to applicable industrial instruments (Awards).

The decision to change the employee’s employment from full time to part time was found to be adverse action within the meaning of the Fair Work Act 2009 (Cth).

The Court accepted that being entitled to a benefit under Compensation Laws (in particular the right to an injury management plan) is a workplace right. The employee had alleged he had been subject to adverse action because he had exercised this workplace right.

The Court did not accept the employer’s evidence that it had decided to alter the employee’s hours because it wanted to cut costs, saying that even if this was the real reason, this did not mean that the decision was not made for reasons that included, a substantial and operative factor, the employee having an entitlement to benefits under Compensation Laws.

The employer was found to have subjected the employee to unlawful adverse action. The employee was also successful in his claims for underpayment under the Awards from 26 July 2007 to 1 July 2012.

On 31 March 2016, the Court ordered the employer pay to the employee:

  • $415,698.55, being the amount it should have paid him under the Awards from 26 July 2007 until the employee resigned; and
  • $49,500 in pecuniary penalties for failing to pay in accordance with the Awards, failing to comply with employee record keeping requirements, subjecting the employee to unlawful adverse action, and breaching the National Employment Standards.

This case is a clear reminder that the courts are willing to punish employers for contraventions of employment legislation.