Whistleblower Protection for Systematic Underpayment Complaints by an Employee

Introduction

An employee who is treated unfavourably in their employment after they have made an underpayment complaint to their employer will often look to the adverse action provisions in Part 3-1 of the Fair Work Act 2009 (Cth) (‘FW Act’) for remedy.

However, the protection of whistleblowers under Part 9.4AAA of the Corporations Act 2001 (Cth) (‘Corporations Act’) may extend to an individual employee who has been treated unfavourably following an underpayment complaint in certain circumstances.

Some of the potential benefits and remedies of the whistleblower regime under the Corporations Act compared to the adverse action provisions of the FW Act mean that use of the whistleblower regime merits further consideration as a cause of action by employee representatives. It may be possible to pursue both causes of action concurrently or consecutively.

Similarly, employers should be prepared for employees who have access to the whistleblower regime and who believe that they have been treated unfavourably following certain underpayment complaints to pursue the employer under the Corporations Act. Employers should ensure that the relevant policies, processes and procedures for addressing such complaints are in place. This will assist in compliance with the Corporations Act and help prepare employers to respond to the grievances and legal action.

Underpayment Complaints under the FW Act

The general protections provisions of the FW Act are triggered in circumstances including when an employee covered by Part 3-1 of the FW Act has made a complaint in relation to their employment (s 341) and adverse action is taken against the employee because they made a complaint (s 340).

The FW Act affords protection to individual employees who are personally aggrieved or affected by employer underpayment and who make a complaint on this basis.

Underpayment Complaints under the Whistleblower Regime

Protection for whistleblowers under the Corporations Act is triggered in circumstances including when an employee (s 1317AAA) suffers detrimental conduct (or the threat of detrimental conduct) because of a belief or suspicion that the employee may have made a protected disclosure (ss 1317AC, 1317ADA) or when the employee’s identity is disclosed without consent (s 1317AAE). The employee will need to make their disclosure about misconduct or an improper state of affairs or circumstances with reasonable grounds for their suspicions (ss 1317AA, 1317AAA). The employee will need to make their complaint to an eligible recipient, such as a senior manager (s 1317AAC).

There are limitations to protection for whistleblowers under the Corporations Act where the disclosure of information is solely concerned with a personal-work related grievance (s 1317AADA). However, this exclusion does not apply in circumstances (including where victimisation has occurred) where the disclosure has significant and wider implications for the regulated entity (s 1317AADA(2)).

This is relevant to systematic underpayment matters. Organisations with a corporate culture of non-compliance for employee payment obligations can be expected to have contravention and compliance issues that affect multiple employees. This is because the attitudes, policies or practices that led to the underpayment of one employee will often exist at an organisational, structural level and therefore apply broadly. This fact is recognised in multiple sources. This includes the recognition of the existence of such corporate culture in the wage theft offences of the Wage Theft Act 2020 (Vic) (eg. ss 6-8, 11-12) or the serious contravention provisions of the FW Act which include knowing and systematic patterns of conduct (s 557A).

Potential Benefits of the Whistleblower Regime

The whistleblower regime under the Corporations Act may be of interest to an employee who has suffered detrimental conduct from their employer following an underpayment complaint.

To begin, the possibility of criminal penalties under the Corporations Act provides a dramatic point of departure from the FW Act (ss 1317AAE(1), 1317AC(1)–(3)). Knowledge about the low levels of litigation success under the whistleblower regime is unlikely to stem the chill that some employer officers may feel at the possibility of being imprisoned.

Second, the ability of an employee to achieve redress for damage to reputation or to achieve an apology under the Corporations Act will also be of significant interest to certain employees (ss 1317AD, 1317AE). This may be so where employment has ended in difficult circumstances and the fallout has resulted in reputational harm. It may also be important where restorative justice may be facilitated by an employee’s receipt of an apology.

Third, the protection of identity under the Corporations Act (s 1317AAE) would be of great significance to many employees who are often sensitive and concerned about the implications on their job security or work environment following an underpayment complaint. 

Restrictions of the Whistleblower Regime

There are a number of circumstances in which the whistleblower regime under the Corporations Act is inaccessible. One major restriction is the limited application of the Corporations Act to the public sector. There are also other restrictions that mean that the whistleblower regime may not apply to a particular employee and their complaint making, such as a failure by the employee to make their disclosure to an eligible recipient.

Conclusion

It may be possible for an employee to engage both causes of action under Part 9.4AAA of the Corporations Act and Part 3-1 of the FW Act discussed above.

If so, the pursuit of whistleblower protection under the Corporations Act alongside redress for adverse action under the FW Act may provide a powerful claim for some employees in the circumstances described above.

In turn, employers should have ready strategies to defend both of these causes of action (potentially simultaneously or one after the other) following an employee’s claim of mistreatment as a result of underpayment complaint-making. 

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