Hypotheticals by Manny Wood. Published in the Coffs Coast Advocate on 20 August 2016.
Joe operates a fish and chip shop, owned by his company Fishy Joe’s Pty Ltd.
Joe has a number of permanent employees working for him, but needs some extra help over the summer.
In October 2013, Joe hires Sam to work as a server. Sam is 22 and Joe pays Sam a flat rate of $17.50 per hour. Sam works Wednesday to Sunday but on rainy days when the shop is quiet, Joe calls Sam in the morning and tells him to stay home. Joe does not pay Sam for the rainy days.
In March 2014 when the shop slows down again, Joe tells Sam he is no longer required but that there might be more work next summer.
Joe does not hear from Sam again until he receives a letter from Sam’s Solicitor in April 2016.
The letter claims Sam has been underpaid approximately $5,500 and that Joe has breached a number of provisions of the Modern Award, including a failure to:
- advise Sam whether he was a Full-time, Part-time or Casual employee,
- inform Sam under what classification he was hired,
- pay Sam any casual loading,
- pay Sam the minimum allowable rate of pay, and
- pay Sam any weekend penalties.
The letter also states that Joe may face substantial fines and demands $20,000 to settle the claim.
Joe is furious and contacts his solicitor.
Joe’s solicitor advises him that if he were to settle the dispute with Sam, he would avoid court action and the potential fines.
Joe offers to settle for $8,000 but Sam refuses and the matter goes to the Federal Circuit Court of Australia.
Joe admits to the underpayment and the breaches of the Award, and the Court orders Joe to pay Sam $5,500, plus pecuniary penalties of $30,000 from Fishy Joe’s Pty Ltd and $20,000 from Joe personally.
If Joe had made an Enterprise Agreement covering Fishy Joe’s employees, it could have superseded the Modern Award and provided clear and flexible employee entitlements, possibly avoiding a costly dispute.
