In Alvarez Nino v Kuksal[2022] FedCFamC2G 401, the question for Judge Forbes’ determination was whether, under the small claims procedure set-out in section 548 of the Fair Work Act 2009 (Cth) (the FW Act), the Federal Circuit and Family Court of Australia (the Court) had jurisdiction to find that an officer of a deregistered company was involved in a contravention of the FW Act by the company and, if so, whether the Court had jurisdiction to make a compensatory order against the officer in respect of their accessorial liability.

The decision is significant as it represents an expansion of employee ability to recover unpaid wages after the deregistration of their employer company. Through an analysis of the statutory construction of the relevant provisions of the FW Act, Judge Forbes concluded that the previously decided case of Beer v Lim & Anor [2012] FMCA 524 had not been correctly decided, and therefore, he was not bound to follow it. Specifically, his Honour found that:

  1. section 537 of the FW Act provides a Guide to Part 4-1 (Civil Remedies), is instructive with respect to the scheme of the relevant Part of the FW Act and its legislative purpose;
  2. sections 539–544 of the FW Act deal with applications for orders in relation to contraventions of civil remedy provisions;
  3. sections 545–547 of the FW Act set out the orders that can be made by the Court in relation to a contravention of a civil remedy provision;
  4. section 548 of the FW Act sets out when proceedings relating to a contravention of a civil remedy provision may be dealt with as small claims proceedings; and
  5. sections 550–558 deal with general provisions relating to civil remedies including rules about evidence and procedure.

Considering the above, Judge Forbes remarked that an employee or a person who claims to have been an employee may make an application to the Court for an order against a person who has contravened the civil remedy provisions. The Court’s jurisdiction extends to the making of any orders where the Court is satisfied that a person has contravened them. Consequently, this extension of power must also encompass the making of orders against persons who are deemed contraveners(eg, the directors of deregistered employer companies).

Effectively, Judge Forbes’ decision provides underpaid employees with the ability to seek personal compensation orders against directors in small claims proceedings in circumstances where they have previously not been able to. Accordingly, where a claim is successful, a director may now be personally liable to pay compensation as an accessory for contraventions of the FW Act. It is also within the Court’s power to make orders to compensate for unpaid wages where it is found that a director of a deregistered employer company has breached a civil remedy provision of the FW Act.

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By Hesh Aiyach and Bernadette McShane