Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2)
Citation: [2018] FCA 480
At a glance
- Penalty
- $45,540
- Employees affected
- 20
What happened
Hail Creek Coal Pty Ltd operated a coal mine with 20 employees covered by an enterprise agreement (Hail Creek Agreement 2011). Between October 2015 and December 2017, the employer reduced shift lengths from 12.5 hours to 12 hours and substantially reduced the Roster Allowance paid to these employees. The employer took the view that when shift lengths reduced, it could proportionally reduce the Roster Allowance. This misconstruction meant the employees were paid less than the full total salary required under the agreement each month. The employer made 506 separate underpayment breaches during this period.
What was decided
The Federal Court found the employer contravened s.50 of the Fair Work Act by paying 20 employees less than the full salary required by the enterprise agreement. The employer's interpretation was honest and reasonable but ultimately wrong. The court considered that general and specific deterrence were not significant factors because the breach arose from a disputed but arguable construction of the agreement. However, the court found the employer should have sought a judicial declaration rather than proceeding with the wage reduction. A penalty of $90 per contravention was imposed, totalling $45,540. The court also ordered compensation for affected employees.
What it means for employers
Employers should not reduce wages or benefits based on a disputed interpretation of an enterprise agreement or award, even if the interpretation seems reasonable. The correct course is to seek independent legal clarification through a judicial declaration before implementing any reduction. An honest mistake does not eliminate liability for wage underpayment. Employees must receive all benefits specified in their industrial instrument.
What it means for employees
Employees who suspect they have been underpaid relative to their enterprise agreement should raise the issue promptly. Courts will examine whether wage reductions were genuinely authorised by the industrial instrument. Even where an employer has made an honest interpretive error, employees are entitled to recover the full amounts owing. Union representatives can bring proceedings to enforce award and agreement terms on behalf of members.
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https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2018/2018fca0480Want more cases like this?
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This summary was drafted from the published decision and reviewed before publishing. It is general information, not legal advice. For your specific situation, speak to the Fair Work Ombudsman (13 13 94) or a qualified lawyer. About these summaries & corrections →