Underpayment is unfortunately common in Australia. Many employees are underpaid based on their statutory entitlements. A recent report uncovered how common underpayment is amongst international people living in Australia, especially backpackers and international students. If you believe this fits you, should you be reporting underpaid wages?

Working out if you have been underpaid

Many employees in Australia are covered by a Modern Award. Finding out if you are covered by a Modern Award can be done by using the Award Finder tool on the
Fair Work Ombudsman website: https://www.fairwork.gov.au/awards-and-agreements/awards/find-my-award/ .

Once you have found your Award (if you are covered), you can find your minimum entitlements by looking at the ‘Minimum wages’ section of the Award. Working out what level you are on under your Award can be done by referring to the Schedule of the Award which will have a classification of the different levels, specifying what skills and duties are required at each level. This will establish your minimum wage.

When establishing your pay entitlements

Most Awards specify a minimum wage for each level in addition to allowances. Depending on your industry allowances may include driving/ petrol allowances, tool allowances, uniform allowances, meal allowances or others. You are also entitled to overtime and leave entitlements. These are required to be paid in addition to the minimum wage stipulated.

Employers do not have to pay specific allowances to employees as they arise in two situations:

  1. If the employee has agreed to enter an Individual Flexibility agreement (IFA);
  2. If there is a set of clause contained in the contract which cover the relevant allowances that are not being paid;

In both situations the employee must be better of from the agreement, in other words their wage increases from the Award minimum enough to mean they are paid more than the minimum wage, allowances and overtime that they would accrue.

If you are not paid at least the Award minimum, you are likely being underpaid.

If you are not paid overtime or your relevant allowances and there is not an IFA or set of clause in place that means you are better off than under the Award, you are likely being underpaid.

If you believe you are being underpaid and you still work for your employer

If you believe you are being underpaid and you are still employed there and wish to remain in your employment, the most appropriate solution is sending your employer a formal but polite email setting out the following:

  1. The Award you believe you are covered by;
  2. What level classification you believe you are on and therefore what you believe your minimum wage is;
  3. What your relevant allowances and overtimes are;

The email should then set out that due to the above, you believe you are not being paid the right wage/ allowances or overtime/ or both. The email should then request a time to discuss this with your employer and come to a solution.

If your employer takes adverse action against you as a result of sending the above message, such as terminating your employment or performance managing you, then you may have a general protections claim. Enquiring about pay is a workplace right and an employer cannot take adverse action against you for making such an inquiry.

Backpay entitlements

It is important to note that employees have a right to backpay. For example, if you have employed for 1 year and work an average of 2 hours overtime per week which has not be paid correctly, you have a right to be back paid the difference in the overtime rate and your normal rate of pay for those hours worked as overtime for the whole period you have been employed. This right to backpay applies if you are still employed or have left employment with your employer.

Interest is also payable on back paid amount.

If you believe you have been underpaid and you have left your employment

In these circumstances, it is usual preferable that your claim for backpay comes from a solicitor as employers are usually more reluctant to backpay an employee who has left or been terminated, however, just because you are no longer employed, you still have a right to your unpaid wages.

Employees have a right to claim their wages for up to 6 years after the amount became due and payable.

For example, if you were employed for 3 years and underpaid for that whole period and your employment ended a year ago, you will be entitled to be back paid for that entire period.

However, if you were employed for 10 years and that employment ended 4 years ago, you will only be entitled to backpay for the final 2 years of your employment as together those periods equal the 6 year statute of limitations.

A letter from a solicitor will likely set out the following:

  1. The Award you are covered by;
  2. What level classification you were on while you were employed and therefore what you believe your wage was;
  3. What relevant allowances, leave and overtimes should have been paid;

This letter will most likely set out a date by which these amounts are payable and the consequences of your employer not paying those amounts.

Sometimes an underpayment claim will be made in conjunction with an unfair dismissal claim, a general protections claim or another claim against your employer.

CALL JFMLAW for assistance with an underpayment claim, working out your entitlements or if your employer has taken adverse action against you for making an inquiry into pay on 02 9331 0266.