In Brief

In a year that saw significant change to the Australian industrial relations framework, there are now more workplace laws than ever which employers must comprehend. But, legislative change is not the only area of employment regulation. Decisions from Australian Courts and Tribunals over the last 12 months are also illustrative additional obligations imposed upon employers. In this update we highlight five cases from 2024 that we predict might have a big impact on employment law and HR policies in 2025.

1. Largest penalties ever awarded for underpayment of wages

Case: On 5 August 2024, in Fair Work Ombudsman v Sushi Bay Pty Ltd (in liq) (No 3) [2024] FCA 869, the Fair Work Commission ordered that a sushi chain corporate group pay a total of AU$13.7 million in penalties for underpaying 163 employees over a number of years. The director and CEO of the group was also personally ordered to pay AU$1.6 million for her involvement in the contraventions, which included failing to pay employees the minimum rates under the relevant modern award, not paying annual leave, requiring employees to repay money, keeping false or misleading records, knowingly providing false or misleading payslips to employees, and knowingly providing false or misleading information to the Fair Work Ombudsman.

Why this case matters: Regulators are continuing to focus attention on exploitation of vulnerable workers, with failure to pay minimum entitlements to employees remaining prevalent. Boards and executives must be crystal clear on wage compliance obligations under modern awards and enterprise agreements, because from 1 January 2025, deliberate wage theft will become a criminal offence, attracting prison sentences of up to 10 years and significant monetary penalties.

2. Half a million ordered against former employee for soliciting clients

Case: On 24 September 2024, in AEI Insurance Group Pty Ltd v Martin (No 4) [2024] FCA 1110, the Federal Court ordered that a former account manager pay AU$500,000 in damages to his former employer, after luring 45 clients to a rival, including 25 clients who migrated after the employer won an injunction against the manager. While the former employer had difficulty gathering evidence of solicitation of clients (mobile phones were ‘immersed in water’, another was run over by a lawn mower, and a third had information deleted from it), the Court ultimately concluded that it was more likely than not that the manager had directly or indirectly solicited clients.

Why this case matters: Restraint of trade clauses are in the spotlight in Australia, with the federal government currently considering whether such clauses are anti-competitive. However, even if injunctive relief is limited in the future, damages proceedings brought by former employers for breach of contract should be considered, with this case showing such a remedy can be successful. Obtaining and proving evidence of loss will be essential.

3. What does “reasonable steps” mean to avoid liability for safety breaches?

Case: On 8 March 2024, the NSW District Court decided in SafeWork NSW v Miller Logistics Pty Ltd; SafeWork NSW v Mitchell Doble [2024] NSWDC 58 that the sole director of a logistics company was not personally liable for the serious injuries suffered by a worker who was hit by a forklift. The director had exercised due diligence and taken reasonable steps including:

• conducting weekly management meetings where safety was an agenda item;
• attending to safety matters quickly;
• the lack of budgetary constraints for fixing work health and safety matters;
• taking an active interest in ensuring work health and safety compliance.

The Court held that directors cannot know everything that is going on at any given moment. The director was entitled to delegate to and rely on an employee who was specifically employed to deal with work health and safety.

Why this case matters: This case emphasis that directors and officers must take reasonable steps to ensure that they are actively complying with their workplace safety obligations, including adopting a hands-on approach wherever possible. Directors and officers should ensure that there are systems in place to identify and manage safety risks, and that these systems are adequately resourced to address workplace safety risks quickly as they arise.

4. Mystery decision-makers spells an instant loss in adverse action cases

Case: On 30 September 2024, in Pilbrow v University of Melbourne [2024] FCA 1140, a lecturer successfully argued that the University of Melbourne had taken adverse action against her in the form of misconduct allegations, after she had made workplace complaints. In defending the claim, the University failed to call evidence about the state of mind of a number of people who were affected or involved in the decision to make the allegations. The Federal Court found that, due to ‘insurmountable’ uncertainty about who decided to level the allegations against the lecturer, the University failed to satisfy its reverse onus obligations under s 361 of the Fair Work Act (FW Act) to prove that it had not taken the adverse action for the reasons alleged.

Why this case matters: With the number of adverse actions matters continuing to rise, employers should take care to precisely identify each and every decision-maker when making decisions to end the employment of employees. In light of Boards or disciplinary committees making collective disciplinary decisions, this case emphasises the need for employers to provide clear contemporaneous documentary evidence of each person whose contribution to a decision to take adverse action against an employee rises above a threshold level.

5. Australian case finds franchisor liable for franchisee employees

Case: A recent Federal Court of Australia case, Fair Work Ombudsman v 85 Degrees Coffee Australia Pty Ltd [2024] FCA 576, found a franchisor liable to pay AU$1.44 million in civil penalties relating to the franchisees contravening the FW Act by underpaying franchisee workers.

Why this case matters: The penalties are the third highest ever secured by the Fair Work Ombudsman (FWO) and the case marks the first time FWO has used the "responsible franchisor entity" provisions to hold a franchisor accountable for its franchisees’ actions. The case is a warning for franchisors who should specifically take actions to consider the degree of control over franchisee operations, including how that control may be exercised to ensure that franchisees comply with legal obligations to their personnel under the FW Act.

For further updates subscribe to our monthly IR Insight podcasts where we explore topical and emerging legal issues impacting upon employers in Australia. Email events.au@dentons.com to subscribe.