Valid redundancy in underpayment situation

News

Valid redundancy in underpayment situation

An employer who dismissed an employee following its discovery that it had been underpaying the employee owing to erroneous advice from the CES has been held to have validly terminated the employee because of the employer’s poor financial situation.

WantToReadMore

Get unlimited access to all of our content.

An employer who dismissed an employee following its discovery that it had been underpaying the employee owing to erroneous advice from the CES has been held to have validly terminated the employee because of the employer’s poor financial situation.

The employer operated a restaurant out of a NSW Northern Rivers Golf Club. The employee commenced part-time employment of 20 hours per week with the employer in May 1996.

Prior to the commencement of the employment relationship, the employer was advised by the CES that the applicable award wage was $8.40 per week. However, discussions in September 1996 involving the employer, the employee and the NSW Department of Industrial Relations revealed that the correct award wage was in fact $11.74.

The employee consequently demanded that she be paid at the correct award rate, whereas the employer responded by saying that they could not keep the employee on at the higher rate owing to financial circumstances. Commissioner Bacon of the Federal Industrial Relations Commission held (Newman v Eagles Nest Restaurant, Print N7639):

"If the sole reason for the termination of the [employee’s] employment was the refusal of the [employee] to accept lower than award wages then a valid reason does not exist for the termination of employment. On the evidence I believe that the restaurant is not operating on a financially sound basis. This was not contested by the [employee]. In the circumstances I am satisfied that the decision to terminate the [employee’s] employment was based on the economic and/or operational requirements of the [employer’s] establishment. Accordingly, the termination was for a valid reason."

 
Post details