Most employees are aware that they are bound to follow all lawful and reasonable directions issued by their employer. But is it lawful and reasonable to require an employee to spend or pay back money?
Section 325 of the Fair Work Act 2009 (Cth) provides that an employer must not directly or indirectly require an employee to spend, or pay to the employer or another person, an amount of the employee's money or salary if:
- The requirement is unreasonable in the circumstances; and
- For a payment - the payment is directly or indirectly for the benefit of the employer, or a party related to the employer.
It is necessary to examine the context in which the direction has been made when determining whether a requirement to spend or pay money is reasonable. The explanatory memorandum of the Fair Work Act 2009 (Cth) provides the following examples:
- It is likely to be unreasonable for an employer to require an employee to donate a proportion of their pay to a charitable or religious organisation nominated by the employer.
- It may be reasonable for an employer to require an employee who is a tradesperson to purchase tools required to perform their duties (unless the employer is otherwise required to provide those tools).
Similarly, the explanatory memorandum of the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth), which amended section 325 of the Fair Work Act 2009 (Cth) (among other things), outlines exceptional circumstances in which it will always be unreasonable to direct an employee to spend or pay money. This includes when an employer requires an employee to pay 'cashback' to keep their job or otherwise uses undue influence, duress or coercion.
Prospective employees are also protected by section 325 of the Fair Work Act 2009 (Cth). This means that it is likely to be unreasonable, and therefore unlawful, for an employer to require a prospective employee to make an upfront payment to secure a job offer.
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.
