Workplace Solutions Quarterly Newsletter – September 2015
Published on September 9, 2015 by Michael Barnes
In this edition of the Carroll & O’Dea Workplace Solutions Newsletter we report on:
- The rules and regulations around deductions from employees’ wages.
- Sometimes well meaning decisions may be unlawful.
- Employees’ rights to support in the workplace.
We hope you enjoy this edition of our Newsletter.
The Carroll and O’Dea Workplace Solutions Group
Deductions From Wages – A Risky Business
Most employers are not fully aware of the circumstances entitling them to make deductions from an employee’s wage particularly in situations where the employer seeks to recover money they believe is owed to them.
The Fair Work Act 2009 (Cth) (the “Act”) contains specific provisions regarding circumstances of when an employer may make deductions from an employee’s payment.
Unlawful deductions can expose an employer to civil penalties.
Section 323 of the Act requires an employer to pay an employee the amount owing to him/her in full in relation to work performed. The exceptions to this obligation are contained in section 324 of the Act which permits an employer to make deductions where (S.324(1)):
- the deduction is authorised in writing by the employee and is principally for the employee’s benefit (eg a salary sacrifice arrangements); or
- the deduction is authorised by the employee in accordance with an enterprise agreement; or
- the deduction is authorised by or under a modern award or a Fair Work Commission order; or
- the deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a court (eg income tax deductions, child support, or a garnishee Court order).
A written authorisation from an employee must specify the amount of the deduction. The authorisation may be withdrawn at any time.
There is no express provision in section 324 allowing an employment contract to generally “authorise” deductions from salary or wages, unless the authorisation falls within section 324(1).
Although it is common practice for contracts of employment to contain provisions which expressly allow an employer to make deductions, such terms may not expressly comply with section 324 of the Act. Section 326 of the Act provides that certain terms have no effect, the section provides:
(1) A term of a modern award, an enterprise agreement or a contract of employment has n effect to the extent of that the term:
- permits, or has the effect of permitting, an employer to deduct an amount from monies payable to an employee for work performed; or
- requires, or has the effect of requiring, an employee to make a payment to an employer or another person;if either of the following apply:
- the deduction or payment is:
(a) directly or indirectly for the benefit of the employer, or a party related to the employer; and
(b) is unreasonable in the circumstances;
Further, a term of a modern award, an enterprise agreement or a contract of employment has no effect if it (S.326(3)):
(a) permits, or has the effect of permitting, an employer to deduct an amount from monies payable to an employee in relation to the performance of work; or
(b) requires, or has the effect of requiring, an employee to make a payment to an employer or another person.
Section 326 refers to a contract of employment which makes the issue confusing, as the term contract of employment is not included in section 324 as an instrument from which deductions may be authorised.
In the decision of Andreas Bader v Cyclone City Cleaners Pty Ltd  NTMC 044, the Court held, in reliance of section 326 of the Act, that an employer was not permitted to unilaterally withhold award wages owing to an employee against a debt the employer alleges he owed to it for damage the employee was alleged to have caused to the employer’s motor vehicle.
Author: Nicole Dunn
Well Meaning Decisions May Offend The Law
It is essential that when making decisions that affect employees, employers take into account provisions of the Fair Work Act 2009 (Cth) (the “Act”). Employers need to be aware that some decisions which may seem reasonable to them, and in the best interests of an employee, may offend the law.
The Federal Circuit Court in Sagona v. R & C Piccoli Investments Pty Ltd & Ors  FCCA 875 (30 April 2014) found that a photography business had constructively dismissed an employee. The Court accepted the employee’s evidence that she felt she had no choice but to resign.
In this case, Ms Sagona informed her employer that she was pregnant and that she would be taking a period of parental leave. Upon receiving the notice that Ms Sagona was pregnant, the employer sought to alter her duties because:
- it was their belief that “it was not a good look” for customers to see a pregnant woman working in the business and, it would make the employer look like it was a “slave driver”;
- it was their belief that Ms Sagona would appear “desperate” if she worked while she was noticeably pregnant; and
- one of the directors of the employer was particularly concerned about Ms Sagona losing the baby if she continued to undertaken her normal duties as that director had lost a baby in the past.
It is apparent that the decisions made by the directors of the employer were influenced by their own life experiences. The decision made and the manner in which the employer sought to alter Ms Sagona’s duties, no matter how well meaning, was in breach of the law.
The Court held that in this case the employer had taken adverse action against Ms Sagona and awarded her compensation in the sum of $235,097.00.
What are Employees Rights to Support in the Workplace?
In the modern workplace employers often face demands made by employees to have a “support person” present during certain processes associated with performance issues, investigative processes and disciplinary procedures.
That demand is often asserted as a right by the employee.
Here we seek to examine some considerations that employers should be mindful of in relation specifically to what support they may agree to for employees in the workplace. Further, it should be considered whether a standard approach is to be adopted or whether there is to be some flexibility in the approach.
There is always a legitimate concern that circumstances relating to performance or disciplinary matters, may lead to an unfair dismissal claim. Within the Fair Work Act 2009 a relevant consideration is the criteria for considering whether the dismissal was harsh, unreasonable or unjust. This is to be found, in part, in section 387(d) which states:
“In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal.”
There is Full Bench authority relating to this sub-section however, this sub-section is not the whole story.
A prudent employer needs to consider and have a strategy in place as to whether the employee has a right to support, ranging from a representative described as an advocate, through to a support person who is no more than a silent witness.
You should consider whether there is a legal framework that guarantees “support” during workplace meetings. Who that person may be. What is the nature and the quality of that support.
Independent of whether an employee asserts an entitlement to be represented or supported, whether it’s an investigative stage or a disciplinary stage, a prudent employer will have regard to:
- it’s own past practice;
- whether such issues are addressed in any company Policy or Procedure that was being shared with the employee;
- whether there is any provision in the contract of employment dealing with the right to representation or support;
- whether there is any relevant provision in any Enterprise Agreement or modern award; and
- as referred to above at section 387(d).
Where it is determined that support should be provided to employees, the extent of that support is not always clear.
Author: Michael Barnes