Federal employers can be subject to state wages laws


Federal employers can be subject to state wages laws

There are state laws that apply to federally covered employers that can result in prosecution for underpayment even though the employers are complying with federal law.


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There are state laws that apply to federally covered employers that can result in prosecution for underpayment even though the employers are complying with federal law.

Just such a scenario was recently put to WorkplaceInfo.

Q    We have a number of AWAs within our organisation which have been verified by the Workplace Authority as passing the (then) ‘fairness test’ when compared to the applicable NSW NAPSA.  

Because of the retail nature of our business, we employ a significant number of young people under AWAs, including people as young as 16 years.  

We recently received a letter of complaint from the parent of a 17 year old employee employed in one of our New South Wales outlets claiming we are underpaying the employee, because their wage under the AWA  is less than the rate prescribed under a NSW State award.  

We made enquiries with the NSW Office of Industrial Relations and were advised their claim for underpayment would succeed, adding that the company could be sued by their Office to recover the correct wages if the company did not rectify the situation.  

Because we are an incorporated employer, it is our understanding that the WorkChoices laws apply and override any state law dealing with wage rates and those employment conditions provided by the Workplace Relations Act. Having had the AWA assessed by the relevant federal authority as passing the fairness test, we are bemused that a State authority is insisting we comply with state laws, particularly as the Workplace Authority made no mention of complying with state laws when applying the fairness test to our AWAs.  

Because of the number of employees involved, the underpayment claim, if successful, would involve considerable back pay, apparently back to 27 March 2006 in some instances.  

Are we liable for any underpayment of wages in this circumstance?

A    The answer is yes, where the junior employee is under 18 years of age, employed in New South Wales and the arrangement was entered into on or after 27 March 2006.

The Industrial Relations (Child Employment) Act 2006 [NSW] provides that an employer of a child under 18 years of age not covered under a state industrial instrument, who entered into an agreement or other arrangement on or after 27 March 2006, must ensure that there is no net detrimental result in relation to the child’s minimum conditions of employment under the comparable State award, or relevant industrial relations legislation (Annual Holidays Act, Employment Protection Act (redundancy pay) or Long Service Leave Act).

In this case, the wage rate for a 17-year-old under the NSW State Award is greater than the relevant APCS rate of pay, therefore, the state award wage rate would prevail. Conversely, the minimum rate of pay for junior employees aged 18 years and above would be subject to the relevant APCS wage rates within the scope of the applicable NAPSA.

Child labour laws

The reason this particular State law overrides federal law, in this respect, is that s16(3) of the Workplace Relations Act does not exclude state or territory laws covering certain matters, including ‘child labour’. This particular state legislation is deemed to fall under the matter of child labour.

Laws in other states and the territories that govern the employment of children (as defined) would also override the relevant provisions of an AWA, although most state or territory child labour laws usually prescribes matters such as restrictions on certain types of work under a prescribed age and restrictions on the time of day when work can be performed by a child.

Lack of communication 

Unfortunately, from the employer’s perspective, it would appear the respective federal and state or territory government authorities are not required to communicate the necessary obligations to be observed under the other’s respective jurisdiction. 


Which conflicting employment condition applies?

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