Underpayments of entitlements

Authored by the LexisNexis Legal Writer team.

Employee entitlements come from various sources, including industrial instruments, legislation, contracts of employment and policies. The provisions setting out employee entitlements in the Fair Work Act 2009 (Cth) (FW Act) are civil penalty provisions.

Unpaid or underpaid employee entitlements commonly present in four typical scenarios:

• failure to pay award entitlements, including loadings and penalties;
• the misclassification of an employee as a contractor;
• failure to pay superannuation; or
• an underpayment which arises as a result of an annualised salary arrangement.

Primary liability lies with the employer, however persons involved in the contravention can be liable as accessories (including franchisors or holding companies). Where the liability relates to vulnerable persons and/or is particularly serious, penalties can be significantly higher.

What entitlements do employees get?

Employees have minimum paid entitlements, some of which depend on whether the employee is a full-time or part-time employee, a casual, a pieceworker or an outworker.

These include NES entitlements, paid entitlements under industrial instruments (eg minimum wage rates, overtime, penalty rates and other allowances), compulsory superannuation, workers compensation insurance and minimum wage rates set by the annual National Minimum Wage Order.

Independent contractors may also be entitled to compulsory superannuation and workers compensation insurance if treated as “deemed employees” under that legislation.