Underpayment cases


Underpayment cases

Three underpayment cases from the South Australian Industrial Court cover: long service leave; a transferred employee; and a determination as to the correct classification of an employee.


Get unlimited access to all of our content.

Three underpayment cases from the South Australian Industrial Court cover: long service leave; a transferred employee; and a determination as to the correct classification of an employee.

Long service leave accrual not broken when employee injured

Key point: An employee is entitled to accrued long service leave despite periods away from work due to illness or injury. The applicable legislation should be checked to see if there is a time limit on the permissible break in service.

Detail: The employee only performed light duties for approximately 45 days over a period of one year and seven months. During this period he had three operations performed on his injured foot.

To complicate matters, the business was transferred to a new employer in therelevant period.

The issue of frustration of contract arose. The court quoted Lord Radcliffe in Davis Contractors Ltd v Fareham U D C [1956] AC 696 at pp727-729:

"Frustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract...it was not this that I promised to do."

The court regarded the inaction on the part of the employer as to termination of the contract as an indication that it regarded the contract of employment as on foot. The applicant by hisattendance to perform rehabilitation duties showed an intention to return to work as soon as he was in a position to do so.

When the employee ceased voluntary rehabilitation work and as at the 16 July 2001 there was in existence a crystallised situation of frustration.

Continuity of service

The continuity of service of the applicant was preserved by s 6(1)(d) of the Long Service Leave Act (SA)which states:

"A workers continuity of service is not affected by absence of the worker from work on account of illness or injury."

The court found the applicant's period of service with the respondent and its predecessor covers the period April 1993 to 16 July 2001. The entitlement under s 5 of the Act arises in respect of completed years of service namely April 1993 to April 2001, a total of eight years.

The applicant has completed eight years of service. He was entitled to the monetary equivalent of 1.3 weeks leave in respect of each completed year of service, which is 10.4 weeks.

See: Tucker v McAllery Family Holdings Pty Ltd [2004] SAIRC 10 (27 February 2004) – Ind Ct (SA) – Ardlie – IM.

Transferred employee entitled to old rate

Key point: An award provision that preserved a public sector employee’s rate of pay when transferred between government agencies did not offend the wage fixing principles.

Detail: The relevant provision was: 'No employee shall suffer any loss of gross income as a result of transfer from employment by the Chief Executive Officer of the Department for Industrial Affairs or by a hospital or health centre incorporated under the South Australian Health Commission Act 1976 to employment under this Award.'

The Award was not inconsistent with the wage fixation principles. The wage fixation principles provide a framework within which labour costs are monitored. They are designed to limit the movement of wages and arrangements contrived to circumvent their aims.

Nothing had occurred in the making of this award which offended the wage fixation principles. The applicant accepted a transfer from one employer to another; she accepted a change to some of her duties. All of that was consistent with the Award.

See: Jaques v Tempo Services Ltd [2004] SAIRC 12 (17 February 2004) – Ind Ct (SA) - Farrell IM.

Court determined classification when employer failed to do so

Key point: An employee originally working as a casual was found to be permanent as the contract of employment in issue was not broken. The employer failed to state the nature of the employee’ engagement so the court was left to determine this on the evidence.

Detail: The applicant was engaged by the respondent for a short duration. The duties he performed during that time were limited to milking duties or activities directly or indirectly associated with milking duties.

Whilst there may have been an intention sometime in the future on the part of the respondents to expand the duties of the applicant beyond that of milking, because the employment was of such short duration this never eventuated.

The court found that the applicant was not a manager or herd manager but a milker. He was entitled to any benefits due to him under the operation of the Award.

The respondents failed in their obligation to inform the applicant of the terms of the engagement and in particular whether he was to be full-time, regular part-time or casual and further whether there was any probation period.

The court considered that the applicant should be categorised as station hand under Pt 3 of the Pastoral Industry Award.

See: Sheriff v R & T Paltridge [2004] SAIRC 11 (13 February 2004) – Ind Ct (SA) - Ardlie IM.

Related: Information on the payment of wages generally is in the encyclopaedia.


Post details