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workplace law

Pendlebury Workplace Law is a specialist workplace relations and employment law legal practice based in Sydney.

Recent decisions of Federal Court Circuit re underpayment claims from employees – liability of the directors

The following two cases are recent decisions of the Federal Court Circuit in relation to underpayment claims from employees.  You may find these interesting, especially with respect to the liability of the directors.

Scotto -v– Scala Bros Pty Ltd & Anor [2014] FCCA 2374 (17 October 2014)

The Federal Circuit Court has found that a sole director of a delicatessen and cafe accessorily liable in an underpayment case spanning a period of more than 30 years and over 4 eras of industrial law.

The assistant, Mr. Scotto, employed by Scala Bros at its combined delicatessen and café at Sydney’s Flemington Markets from 1981 until 2010, successfully argued that, throughout this period, he was not paid the required minimum wages, allowances or overtime and that the company failed to make superannuation contributions on his behalf or provide him with payslips.

He also argued before Justice Cameron that Scala Bros failed to pay his accrued annual and long service leave when his employment ended.

His Honour said that while some of the employee’s claims could not be pursued due to time limitations within some legislation (limiting to some claims to 6 years), he was able to determine that Scala Bros had breached the Fair Work Act, Workplace Relations Act and the Industrial Relations Act 1991 (NSW) (however, Mr. Scotto did not press any claims under the NSW Industrial Relations Act).

His Honour also accepted the employee’s argument that Scala Bros’ sole director knowingly contravened the federal statutes after becoming the delicatessen’s only director on the death of her father (who was also the step grandfather of the employee) in June 2009.

Justice Cameron said, she could not be found to have been accessorily liable for the period when her father ran the company, as she then had “no particular responsibility for, or duties in, Scala Bros, other than to sign company documents as requested“.

Judge Cameron will rule on compensation, penalties and costs at a later date.

Fair Work Ombudsman -v– Pty Ltd & Anor [2014] FCCA 2222 (24 October 2014)

The Federal Circuit Court has also found a company director accessorily liable after he failed to act on a Court Order that his company repay an underpaid employee on the basis that “he personally disagreed, and still does, with the determinations” of the Court.

Justice Hartnett granted the Fair Work Ombudsman’s application for a declaration that the director (who is also secretary and shareholder) breached the Fair Work Act by failing to ensure that an employee was repaid $4,222.05 by the middle of 2013 and subsequently.

Her Honour, who will decide on penalties and costs at a later date, said the director was directly responsible for the failure to pay the employee his correct entitlements and for the company’s subsequent failure to abide by the resulting compliance notice.

Brooke Pendlebury
Sunday, November 2, 2014
Entitlements, News