Publish date: 08 February 2023

In 2015, the Four Corners program tipped the bucket on unlawful employment practices at 7 Eleven franchises, including systemic underpayments and even instances of workers being forced to “repay” a portion of their wages to disguise underpayments.  As a consequence of subsequent engagement with the Fair Work Ombudsman it was reported that some $144.5 million in wages, $19.5 million in interest and $9.6 million in superannuation was repaid to workers.  

Then in 2019, celebrity chef George Calombaris’ Melbourne restaurant chain was reported to owe staff more than $7.8 million in respect of underpayments to 524 employees over a six-year period.  

In 2021, Woolworths settled a wage theft claim in the vicinity of $300 million.  That apparently did not fully address the issue, with a seven week-long Federal Court case set to commence later this year in respect of nearly $500 million in claims for underpayments against both Woolworths and Coles.   

In 2022 it was Dominos Pizza’s turn to be taken to court in a class action over thousands of staff allegedly paid less than the minimum award wage.  The list goes on …. 

The above matters, and others no less important to the affected workers and families, are being increasingly highlighted in the media.   

But why am I, as a personal injuries lawyer, paying particular interest?   

Well, it is due to the fact that, in personal injuries matters, lawyers and the courts place a significant degree of reliance upon an injured person’s past employment earnings as a starting point and guide for the determination of economic loss in personal injury claims.   

The increase in reporting of major employers, who have significant human resources, accounting and legal resources available to them, and yet still manage to significantly underpay workers, has to call into question the reliability of evidence of past paid wages as a correct measure of a worker’s economic loss post injury.  If the major employers, with all those resources, are getting their wage and entitlement obligations wrong, it is safe to assume that is only the tip of the iceberg. Smaller employers without access to fully formed human resources departments, professional accountants and either internal or external legal advice clearly have a reduced capacity to validate the correctness of their wage payments. What about businesses under financial pressure or seeking to achieve some form of profit or return whatever the cost?  

The Fair Work Ombudsman has limited financial and staffing resources, such that it is only able to, on public policy grounds, pursue cases most likely to result in the greatest benefit to the greatest number of people. The Fair Work Ombudsman’s annual report is a staggering read of thousands of substantiated complaints, unlitigated undertakings and informal resolutions.   

However, given that personal injury cases are by and large indemnified by the relevant workers compensation, CTP or public liability insurer, there is no reason why any identified underpayment of wages to an injured person should not be addressed. Surely, where identified, calculations of past and future economic loss should be made using the injured person’s correct rate of pay in accordance with their applicable industrial instrument and not the underpayment amount the employer somehow managed to get away with prior to the accident or injury. Why should insurers add insult to injury by assessing economic loss on a level of wages which is otherwise established to amount to a contravention of applicable legislation and regulation?   

And if not underpayment in accordance with a pay rate applicable to a particular worker classification, what of misclassification of the worker under the categories set out in the relevant industrial instrument; or payment under an incorrect industrial instrument?  A clear case in point is the tension between the Restaurant Industry Award 2020 and the Fast Food Industry Award 2020.   

This article is not the appropriate forum to set out all of the nuances of the issues and my concerns. I will try and elaborate a little further on the above in my upcoming presentation at the Australian Lawyers Alliance Queensland Conference.  Suffice to say, entrenched underpayment bias seems to be “a thing” and it is something that I feel personal injury lawyers need to give further consideration to when they next approach their assessment of economic loss. 

As published in Australian Lawyers Alliance.

Stephen Hughes
Stephen Hughes
Special Counsel
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