Opinion
Why wage underpayments should concern personal injury lawyers
23rd Feb 2023
In 2015, Four Corners 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.
In 2019, celebrity chef George Calombaris’s 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.[i]
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.[ii]
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.[iii] 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.
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.
This is an edited version of an article first published by Travis Schultz & Partners.
The ALA thanks Stephen Hughes for this contribution.
Stephen Hughes, Special Counsel, Travis Schultz & Partners, is a Queensland Law Society (QLS) Accredited Specialist who has been working for 30 years across workplace relations, employment and compensation law. Stephen deeply understands the impacts that injury can have on a person’s life and livelihood, both through his extensive legal experience and serving as an Honorary Board Member and Legal Counsel for the Australian Society of Rehabilitation Counsellors Ltd (ASORC) since 1993. In 2021 Stephen was proud to be awarded an ASORC Honorary Fellowship in recognition of his many decades of service.
The views and opinions expressed in this article are the author's and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).
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[i] See ‘George Calombaris's MAdE Establishment underpaid workers $7.8 million’, ABC News (2019) <abc.net.au/news/2019-07-18/george-calombaris-made-establishment-backpays-underpaid-workers/11320274>
[ii] See ‘Coles accused of underpaying more than 7,500 workers by $115m’, The Guardian (2021) <https://www.theguardian.com/business/2021/dec/02/coles-accused-of-underpaying-more-than-7500-workers-by-115m>
[iii] See B Schneiders ‘Class action case accuses Domino’s of underpaying workers’, The Sydney Morning Herald (2022) <https://www.smh.com.au/business/workplace/class-action-case-accuses-domino-s-of-underpaying-workers-20221024-p5bsdi.html>
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