A law firm director and the law firm’s service company have been ordered to pay $184,000 in penalties and costs for withholding entitlements of a former general manager after she resigned.
The Facts
Mrs Kelly was employed by a service company to Atanaskovic Hartnell, a Sydney law practice in April 2004. She was responsible for human resources, administration, information technology and finance. She reported to one of the directors of the law firm. She gave notice of resignation in August 2016. The law firm withheld payment of her entitlements and later alleged that it was not required to pay them as it was cross-claiming for higher amounts.
The Entitlements Ruling
In an earlier ruling the Court ordered for her to be paid her full entitlements of $130,000 plus interest and $30,000 in general damages and did not reduce those amounts for the employer’s cross-claim, instead finding that the cross-claims were only a scheme in order to defeat her entitlements claim.
The Penalties Ruling
In a subsequent penalties ruling, the Court ordered the service company to pay penalties of $153,900 and its director to pay $30,780 for failing to pay the General Manager’s wages, annual leave and long service leave.
In the penalty decision the Court said that the contraventions by the service company, in which the director was involved, were a deliberate withholding of the General Manager’s entitlements.
The Court said that the cross-claims reflected a resistance by the service company in evading its legal obligations.
The Court was concerned that the entitlements and damages that were ordered in the earlier ruling were only paid soon before the penalty hearing.
The Court was also concerned that neither the service company nor the director had showed contrition.
The Court said that, “employers must be dis-incentivised from shirking their legal obligations”.
Implications
Failing to pay basic worker entitlements exposes an employer to the risk of substantial penalty for non-compliance with workplace law, as well as having to pay the entitlements.
Employers should:
- deal with demands for unpaid entitlements promptly and squarely;
- acknowledge and rectify genuine mistakes; and
- only dispute entitlements claims on genuine and well-founded grounds.
Some more information is available here or you can book online for an initial no-obligation chat about reviewing an employment contract or contractor agreement.
*Kelly v Atanaskovic Hartnell Corporate Services Pty Ltd (No 3) [2023] FedCFamC2G 1 (2 February 2023)