Leveling the Playing Field: Changes to Small Claims Matters for Underpayment of Wages

Written by Harshini Elliott, Senior HR Partner

Effective 1 July 2023, the Secure Jobs, Better Pay Bill will see the jurisdictional limit for small claims proceeding under the Fair Work Act 2009 increase from $20,000 to $100,000. This will enable employees to bring a claim for underpayment up to the value of $100,000 in the small claims jurisdiction of the Federal Circuit Court and state and territory courts.

Currently, underpayment claims which exceed the small claims cap can only be determined by the way of a formal court process. Undoubtedly, this process can be significantly complex, expensive, stressful and time-consuming, especially for low-level employees. As a result, this often leads to employees either dropping parts of their claim in order to meet or fall behind the small claims threshold or cancel their claim in its entirety.

As an Employer, this will mean that a great number of employees seeking to resolve claims (including that of underpayments) under the Fair Work Act will be able to access a more efficient and more cost-effective process to resolve their claims. It will effectively make it more accessible for employees to bring an underpayment claim against their Employer and for it to be resolved more quickly and more affordably for the employee.

From 1 July 2023, the claims that can be run as small claims proceedings include:

1. Where the compensation sought is $100,000 or less; and

2. Where the dispute is about:

   • a term of a National Employment Standard;

   • a term of a modern award;

   • a term of an enterprise agreement;

   • a workplace determination;

   • a national minimum wage order;

   • an equal remuneration order;

   • a safety net contractual entitlement; and

   • a conversion of casual employment to full-time or part time employment

It is anticipated that there will be a greater number of claims for underpayment when this change takes effect. Employers are encouraged to undertake rigorous reviews into their staffing and payroll to ensure employees are receiving the correct payment and entitlements. Where an underpayment is identified, it is strongly recommended that this is reconciled well before 1 July 2023.

How can we help?

As specialists in human resource management and industrial relations, Essential HR assists Australian businesses navigate their way through the complexities around employing people.

If you would like to learn more about the changes to small claim matters or need assistance with an internal review of your employee pay and entitlements to ensure there are no underpayments, please contact us at Essential HR.

To learn more how we can assist your workplace stay up-to-date and compliant by visiting our website at: www.esshr.com.au.

This information is of general guidance only and is not legal advice. Readers are encouraged to consider this information in their own context and with independent advice.