A recent Federal Court ruling (Murrihy v Betezy.com.au Pty Ltd  FCA 908) has confirmed the broad application of the protection provided by Part 3-1 of the Fair Work Act 2009 (Cth) (FW Act) for employees making complaints or inquiries in relation to their employment.
An employee complained to the Chief Executive Officer of her employer about the failure to pay her commissions due under an agreement. The employee said that if the commissions were not paid, she would get legal advice. The Court found that, the CEO responded by threatening the employee that, if she took legal advice about her unpaid remuneration and commissions, she would be fired.
Section 340 of the FW Act is contravened by an employer if they threaten to take adverse action against an employee because they propose to make a complaint or inquiry in relation to their employment.
Is this protection confined to complaints or inquiries directed to the employer? It is clear from this case that it also covers inquiries directed to lawyers. The Court noted that "an employee should be able to have recourse to his or her solicitor, without the fear of repercussions in the nature of "adverse action" taken by the employer".
Some other points emerging from the case include:
- The employee relied on covert recordings of key conversations. In some States and territories recording a private conversation without the consent of the other parties may be illegal. Courts and tribunals may exercise discretion not to admit into evidence recordings that might have been illegally obtained or made. This was clearly not an issue in this case.
- The employer suspended the employee without pay and discontinued her access from the employer's computer system. The Court ruled that this amounted to adverse action. The employer argued this action was taken in response to allegations of Cabcharge misuse. The Court rejected this and found that the action was taken because of the complaints made by the employee about underpayments and her involvement of lawyers to make those complaints. Therefore the adverse action was taken for reasons prohibited under s 340 of the FW Act.
Understand your obligations as an employer to commission-based employees
The decision also throws up some interesting issues arising in commission-based employment.
The employee entered into commission agreements under which she was entitled to a commission of 1% calculated on revenue generated by certain generic or "white label" websites developed by the employee.
However the employer failed to pay any commission to the employee under these agreements, and the employee claimed the amounts as an underpayment.
Among the matters raised in its defence, the employer argued that the employee had failed to prove the amount the employer owed under commission agreements. This was largely due to the fact that the employer had failed to keep records that were necessary to allow the calculation of these commissions, such as records of when each punter's betting session ends.
However the Court ruled that, by failing to maintain the records required to allow actual calculation of commissions, the employer breached an implied duty of co-operation under the contract to do all such things as were necessary on its part to enable the employee to have the benefit of the contract. The Court accepted the employee's proxy proposal for estimating her commission entitlement which was not based on actual data relating to betting revenue.
Furthermore, by not paying commissions at least monthly the employer was found to have contravened s 323 of the FW Act. Section 323 provides that an employer must pay an employee amounts payable to the employee in relation to the performance of work in full at least monthly. Contravention of this provision attracts a penalty, on the application of the employee concerned.
Lessons for employers
- An employer electing to remunerate employees on a commission basis will have obligations to ensure the creation and retention of records that allow the commissions to be calculated and paid. Furthermore, once amounts are due and payable there is an obligation under the FW Act to remit the amounts to the employee in full at least once a month.
- Employers who are negotiating with employees about a dispute or grievance should not take any detrimental action (or, as in this case, threaten to take any detrimental action) because they indicate a wish to seek legal advice or otherwise involve lawyers in the dispute. The protection would equally apply if other kinds of assistance were sought by the employee, such as a union.
- Suspension of employees and termination of computer access constitutes adverse action and must not be motivated by the fact that the employee has an attribute or has engaged in an activity protected by Part 3-1 of the FW Act. Generally an employer can only suspend an employee on full pay.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.