E.2.2. Consideration
55 The Company's jurisdictional challenge to the decision of the Industrial Magistrate raises for determination the interrelationship between s 545 and s 323 of the FW Act and more generally the extent to which s 323 of the FW Act has been used to enforce contractual underpayments.
56 As submitted by the Company, it can readily be accepted that there has been a deliberate decision by the legislature to confer on the Federal Court and the Federal Circuit and Family Court broader powers to grant relief, than an eligible State or Territory court, for contraventions of civil remedy provisions of the FW Act.
57 In contrast to s 545(3) of the FW Act, ss 545(1) and (2) of the FW Act provide:
(1) The Federal Court or the Federal Circuit and Family Court of Australia (Division 2) may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
(2) Without limiting subsection (1), orders the Federal Court of Federal Circuit Court and Family Court of Australia (Division 2) may make include the following:
(a) an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;
(b) an order awarding compensation for loss that a person has suffered because of the contravention;
(c) an order for reinstatement of a person;
(d) an order requiring a person to comply, either wholly or partly, with a notice (other than an infringement notice) given to the person by an inspector of the Fair Work Ombudsman.
58 There are two interrelated differences between the power conferred on the Federal Court (or the Federal Circuit and Family Court), and an eligible State or Territory court. First, in order to enliven the power to make orders, the Federal Court need only be satisfied that a person has contravened, or proposes to contravene, a civil remedy provision. An eligible State or Territory court, however, must also be satisfied that the employer was required to pay an amount "under this Act or a fair work instrument". Second, once the preconditions for making an order have been satisfied, the Federal Court may make any orders it considers appropriate, whereas an eligible State or Territory court may only order an employer to pay the amount to the employee that it was required to pay under the FW Act or a fair work instrument.
59 In my view, the two differences are interrelated because confining the power to grant relief to make an order for the payment of a specific amount necessarily requires an identification of the specific source of an entitlement to be paid that amount. Given the absence of any restriction on the ability of the Federal Court (or the Federal Circuit and Family Court) to grant relief, it was not necessary to introduce any additional specification for the exercise by those Courts of their powers under s 545 of the FW Act.
60 Section 323(1) of the FW Act provides:
323 Method and frequency of payment
(1) An employer must pay an employee amounts payable to the employee in relation to the performance of work:
(a) in full (except as provided by section 324); and
(b) in money by one, or a combination, of the methods referred to in subsection (2); and
(c) at least monthly.
61 Section 539 of the FW Act sets out the standing, jurisdiction and maximum penalties available with respect to applications for orders in relation to contraventions of civil remedy provisions. Item 10 of the table relevantly provides that in respect of a contravention of s 323, an employee has standing to apply to an "eligible State or Territory court".
62 Section 323 of the FW Act falls within Div 2 - Payment of wages etc. of Pt 2-9 - Other terms and conditions of employment.
63 The Explanatory Memorandum to the Fair Work Bill 2008 (Cth) (EM) stated that Div 2 is "about the frequency and methods of payment of amounts payable to an employee in relation to the performance of work and allowable deductions from such amounts".
64 The EM otherwise provides in relation to s 323 of the FW Act:
1279. Subclause 323(1) requires employers to pay employees any amounts payable to the employees in relation to the performance of work:
• in full (except as permitted by clause 324);
• in money (i.e. not 'in kind') by one, or a combination, of the methods referred to in subclause 323(2);
• at least monthly.
1280. A modern award, enterprise agreement or contract of employment may provide for more frequent payment.
1281. Subclause 323(1) does not provide an exception from the requirement for at least monthly payment to deal with the situation where payment of wages falls due on a public holiday. In such a case, the employer would need to ensure that appropriate arrangements are put in place so that employees are paid before the public holiday.
1282. This subclause is a civil remedy provision under Part 4-1 (Civil remedies).
1283. The legislative note after this subclause makes clear that the payment rule covers a wide range of payments, where they fall due during the relevant payment period - including incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates and leave payments. However, the amounts referred to in this subclause would not include superannuation contributions or non-monetary benefits.
1284. Subclause 323(2) lists the methods by which payments may be made, which include cash, direct deposit or cheque. This would, for example, prohibit payment by store credit vouchers. Alternatively, if a modern award or an enterprise agreement provides a method of payment, this must be complied with (subclause 323(3)).
1285. This subclause is a civil remedy provision under Part 4-1 (Civil remedies).
65 In Murrihy v Betezy.com.au Pty Ltd (2013) 238 IR 307; [2013] FCA 908, Jessup J observed at [142]:
A significant innovation introduced by the FW Act was the imposition of an obligation upon a "national system employer" (such as each of the respondents was) to pay its employees amounts payable to them in relation to the performance of work in full at least monthly: s 323(1) of the FW Act. Thus the legislation picks up, amongst other things, entitlements arising under contracts of employment and gives statutory consequences to an employer's failure to make good on them. In this respect, s 323(1) is a civil remedy provision.
66 In Murrihy, Jessup J considered that there was a contravention of s 323 where the respondents failed to pay the applicant's commission entitlements under a commission agreement. His Honour said at [119]:
It was not suggested by the respondents that their failure to pay the applicant's commission entitlements did not involve a contravention of s 323(1). It clearly was such a contravention. Pursuant to cl 3 of the 2009 commission agreement, and the corresponding provision in the 2010 commission agreement, commission ought to have been paid monthly and, as it happens, that corresponds with the least frequent basis of payment for which s 323(1) provides. Subject to any submissions I may receive from the parties, it appears that there was, therefore, a contravention of the section at the end of every month during which a commission entitlement arose.
67 In Association of Professional Engineers, Scientists and Managers, Australia, v Wollongong Coal Ltd [2014] FCA 878, Buchanan J considered, with respect to an application for summary judgment, whether s 323 of the FW Act could be relied upon as giving rise to a statutory obligation to pay amounts promised under contract.
68 The applicant in Wollongong Coal commenced proceedings in a representative capacity as an employee organisation, claiming that employees were entitled to contractual bonuses that had not been paid. The applicant claimed that the employees were therefore not paid "in full" as required by s 323 of the FW Act, and that the respondent had therefore contravened a civil remedy provision. The applicant claimed compensation for loss arising from the contravention.
69 The respondents sought to have the proceedings dismissed on the basis that the applicant had no reasonable prospects of success. The respondents submitted that s 323, read together with s 324 of the FW Act, reflects the former "Truck Act" provisions. The respondents relied on the following statement by the High Court in Construction, Forestry, Mining and Energy Union v Mammoet Australia Pty Ltd (2013) 248 CLR 619; [2013] HCA 36 at [45]:
It is tolerably clear from the terms of s 323(3), and is confirmed by the Explanatory Memorandum which accompanied the Bill for the Fair Work Act 2009, that s 323(1) addresses the same mischief addressed by "Truck Acts" as they had by then come to exist in each State, that is, that an employee's entitlement to payment for work might be compromised by an employer requiring the employee to accept some form of payment in kind of less value than the payment of money forgone …
(Footnotes omitted).
70 With respect to the construction of s 323 of the FW Act, Buchanan J observed:
28 I referred earlier to reliance by the respondents on statements by the High Court in Mammoet. It is certainly apparent, as the respondents contend, that ss 323 and 324 of the FW Act are intended to provide for matters dealt with in the Truck Acts - ie payment in money (not in kind), without unauthorised deductions, and with specific and reasonable periodicity.
29 However, that conclusion does not suffice to exclude the possibility that s 323 of the FW Act has an additional role to play.
30 The ordinary language of s 323 is apt to identify, and provide for the enforcement of, an obligation to pay amounts which have become payable, as well as the more specific obligation to pay such amounts in full, in money and at least monthly (subject to the statutory exemptions which accompany the obligation). It does so by permitting the imposition of a civil penalty for contravention of the obligation.
31 The applicant does not rely on s 323 as a foundation for recovery of any underpayment. It relies on s 323 to establish breach of a civil remedy provision. Recovery of unpaid amounts is sought on a different statutory footing under s 545 of the FW Act, namely compensation for loss suffered as a result of contravention of a civil remedy provision.
32 The applicant's construction of s 323 has direct support in the judgment of Jessup J in Murrihy.
33 Although the construction of s 323 argued by the applicant appears not to have been contested in Murrihy, it appears clear that Jessup J also subscribed to it…
71 His Honour therefore concluded that it could not be said that the applicant had no reasonable prospects of success, and at [36]:
[I]t seems to me that I should approach the question of construction of s 323 in conformity with the views expressed by Jessup J. I should do so as a matter of comity in any event, but I also regard the language of s 323 as sufficiently wide to accommodate the present proceedings. I do not accept the more confined construction advanced by the respondents.
72 Justice Buchanan thus accepted that s 323 of the FW Act could give rise to a statutory foundation for the imposition of a civil penalty with respect to the payment in full of amounts which have become payable pursuant to contractual arrangements, and that s 545 provided a statutory basis for a claim to recover unpaid amounts by way of compensation for loss suffered arising from a breach of a civil remedy provision.
73 A similar observation was made with respect to s 323 of the FW Act by Bromberg J in Australian Education Union v State of Victoria (Dept of Education and Early Child Development) (2015) 239 FCR 461; [2015] FCA 1196. His Honour said at [265]:
The right to receive monies deducted without authority will have vested with an employee as at the time that those monies were payable. In that situation, the employee would have a legal claim to the recovery of the underpayment. That claim may be statutory, contractual or both. Section 323(1) operates upon an existing obligation on the employer to pay. But it also imposes a further statutory obligation to pay in full, in money and at least monthly (except as provided for by s 324): Association of Professional Engineers, Scientist and Managers, Australia v Wollongong Coal Ltd [2014] FCA 878 at [28]-[33] (Buchanan J); and Murrihy v Betezy.com.au Pty Ltd (2013) 238 IR 307 at [142] (Jessup J).
74 In Association of Professional Engineers, Scientists and Managers Australia v Bulga Underground Operations Pty Ltd [2019] FCA 1960, Wigney J accepted that amounts payable to an employee under s 323 of the FW Act include leave entitlements due to the employee under the Coal Mining Industry (Long Service Leave) Administration Act 1992 (Cth):
115 Mr Mayhew and the Association sought declarations that Bulga breached s 323(1) of the Fair Work Act and s 39CB(2) of the Long Service Leave Act by failing to pay Mr Mayhew the full or correct amount payable to him in respect of long service leave upon termination.
116 Section 323(1) of the Fair Work Act relevantly provides that an employer must pay an employee amounts payable to the employee in relation to the performance of work "in full". While Bulga initially submitted that s 323 did not apply to underpayments on termination under the Long Service Leave Act, it ultimately did not press that submission and appeared to concede that amounts payable to an employee upon termination under the Long Service Leave Act were "amounts payable to [an] employee in relation to the performance of work" for the purposes of s 323 of the Fair Work Act. It certainly did not submit otherwise.
117 That apparent concession by Bulga was properly made. The amounts payable to an employee referred to in s 323(1) include leave payments. In Stratton Finance Pty Ltd v Webb [2014] FCAFC 110; 314 ALR 166, the Full Court effectively approved declarations of contravention of s 323 of the Fair Work Act that related to the failure by an employer to pay the full amount due to an employee in respect of accrued but untaken annual leave on termination of employment. There is no reason to suppose that amounts payable to an employee under the Long Service Leave Act in respect of accrued but untaken long service leave would not also be covered by s 323(1). Bulga did not submit otherwise.
118 As noted earlier, s 39CB(2) of the Long Service Leave Act specifically provides for the amounts payable to an employee in respect of untaken long service leave when the employee's employment ceases by reason of redundancy.
119 For the reasons already given, Bulga failed to pay the amount properly due to Mr Mayhew in respect of long service leave upon the termination of his employment. It accordingly contravened both s 323(1) of the Fair Work Act and s 39CB(2) of the Long Service Leave Act.
75 In my view, the conclusion that s 323 imposes a further statutory obligation to pay an amount due in full, whether the amount was payable under statute or contract or otherwise, is consistent with the natural and ordinary meaning of the text of s 323, its interrelationship with s 545 and a beneficial construction given the remedial and protective objectives of the civil penalty provisions in the FW Act in promoting the public interest in compliance: Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 at [15], [31] and [42].
76 It is necessary, however, to acknowledge that in Murrihy, Wollongong Coal and Bulga Underground Operations, the Court did not have to grapple with the additional hurdle imposed by s 545(3) of the FW Act for eligible State and Territory courts. The Court in each of those cases proceeded on the basis that compensation for loss could be ordered under s 545(2)(b) of the FW Act. An eligible State or Territory court however, is only empowered to order that an amount be paid to an employee where it is satisfied that the employer was required to pay that amount under the FW Act or a fair work instrument.
77 The Company placed significant reliance on the reasoning of the plurality of the Full Court of this Court in Qantas Airways Ltd v Flight Attendants' Association of Australia (2020) 282 FCR 243; [2020] FCAFC 227 at [67]-[68] (Jagot and Wheelahan JJ) to submit that s 323(1) did not have the effect of creating any standalone payment obligation under the FW Act for the purposes of s 545(3), and therefore there was relevantly no amount that the Company was required to pay under the FW Act or fair work instrument, as the obligation to pay arose under contract.
78 The Full Court in Qantas Airways was concerned with the interpretation of s 789GDA(2) of the FW Act, which was inserted into the FW Act as part of the JobKeeper scheme. Section 789GDA(2) contained the same text as in s 323, namely "amounts payable to the employee in relation to the performance of work".
79 The plurality said at [67]:
The very word "payable" in s 789GDA(2), in our view, necessarily calls up for consideration the question of the source of the obligation to pay. In common with s 323(1) of the Fair Work Act, the source of the obligation to pay is in the contract or industrial instrument which both statutory provisions pre-suppose govern the liability or requirement on the employer to pay.
80 Their Honours continued at [68]:
[T]he fact that subs 789GDA(2)(b) was copied from s 323(1) (including the copying over and adaptation of Note 2 to s 323(1)) takes on significance. It indicates that it is unlikely that Parliament intended that the same phrase in the two sections have a different meaning. The phrase "amounts payable to an employee in relation to the performance of work" in s 323(1) of the Fair Work Act does not mean the amounts earned by the employee. Nor does it mean the amounts earned by and payable to the employee. It means only that the employer is liable to pay the amounts to the employee. The amount to be paid and the time at which payment must be made are not regulated by s 323(1) (other than the requirement that employees be paid at least monthly). They are regulated by the applicable contract or industrial instrument.
81 Their Honours subsequently noted at [72] that s 323 is not concerned with when work is performed, but rather payment assumed to be regulated by a contract or industrial instrument.
82 I do not understand, however, any of the reasoning of the plurality to contradict the observation made by Bromberg J in Australian Education Union at [265]. The source, as in the origin of the obligation to pay, together with the specific amount to be paid and the time for payment, other than at least monthly, may well be found in a contract, not a discrete provision of the FW Act, but that does not preclude the imposition of a statutory obligation in s 323 to pay the contractual amount in full, in money and at least monthly. As the plurality stated in Qantas Airways at [7], after considering calculations undertaken by the appellant and the respondent of the amounts payable under the different constructions of s 789GDA(2) that they had propounded:
As the above examples make apparent, all three constructions assume that outside of s 789GDA(2) the employer is subject to an obligation to pay the employee wages. This is correct given the terms of s 323 of the Fair Work Act which provides that an employer must pay an employee amounts payable to the employee in relation to the performance of work in full, in money and at least monthly (further reference will need to be made to s 323 below).
83 Although in dissent in the ultimate result in Qantas Airways, the following statements made by Bromberg J at [97]-[98] are consistent with the statement by the plurality at [7] and expand upon his Honour's earlier statement in Australian Education Union at [265]:
97 Section 323(1) does not identify the amount of money payable to the employee. That is left to the contract or relevant industrial instrument. Section 323(1) does, however, regulate when that amount is to be paid on the assumption that a periodic payment will be made for the performance of work. It does that by providing for the outer permissible temporal limit by which an amount payable in relation to the performance of work must be paid to the employee. The outer temporal limit is a month, meaning that all work performed by an employee must be paid for within the period of one month after its performance. The expression "at least monthly" acknowledges that a shorter period may be imposed by a contract or an industrial instrument and, if that is so, the shorter period will apply. The provision contemplated that (unless made earlier and in advance of the performance of the work), a payment in arrears must be made by the end of a period, for work performed during that period.
98 What that analysis reveals is that the amount that must be paid to the employee under s 323(1) is referable to the performance of work in the period prior to the time the payment falls due. The relevant period will be defined by the outer temporal limit applicable, either a month or some shorter period imposed by the relevant contract or industrial instrument. Section 323(1) imposes an obligation to pay in respect of a liability referrable to the performance of work performed in a particular period and not merely in respect of the performance of work whenever performed. If that was not so, the very purposes of the provision - that work performed must be paid for within the limited period allowed - would be defeated.
84 An expansive view of the scope of s 323(1) was also taken by White J in Augusta Ventures Ltd v Mt Arthur Coal Pty Ltd (2020) 283 FCR 123; [2020] FCAFC 194, consistently with the statements made in Qantas Airways by Bromberg J at [97]-[98] and the plurality at [7]. His Honour stated at [98]:
It is not necessary to note the various provisions in the FW Act, the industrial award or the enterprise agreements on which the group members' claims in each proceeding are based but it is pertinent to note that s 323(1) of the FW Act requires an employer to pay an employee amounts payable to the employee in relation to the performance of work in full (subject to some exceptions which are presently immaterial) and at least monthly. As is noted by the authors of Creighton & Stewart's Labour Law, Sixth Edition, The Federation Press at [15.59]:
Once an employee has accrued wages, the employer is obliged to make the payment. If the wages are due under an award, enterprise agreement or statute, then, in the absence of any provision to the contrary, this obligation is absolute in character.
85 I therefore do not consider it to be inconsistent with the reasoning of the Full Court in Qantas Airways, that while the source of the obligation to pay may be founded elsewhere, s 323 of the FW Act nonetheless imposes a further statutory obligation to pay an amount in full, in money and at least monthly, consistent with the observations of Jessup J in Murrihy and Bromberg J in Australian Education Union, as well as the remedial and protective objectives of the FW Act.
86 I am therefore satisfied that the Industrial Magistrate did have jurisdiction to make the orders on 17 August 2022, on the basis that her Honour was satisfied that the Company was required to pay an amount to Mr Cannon under s 323 of the FW Act, and contravened s 323 of the FW Act in failing to pay the amount.
87 For the foregoing reasons, Ground 4 has not been established.