20 thoughts on “Sandpit

  1. More on wage theft and my experience of the legal process. Our solicitor finally agreed to give us a cost range for my partner’s wage theft case. The solicitor says that unless an out of court settlement occurs, it will cost $30,000 to $80,000 to run the case, including costs already incurred. This is in spite of the fact that I did all the calculations for the Points of Claim and even ended up writing much of the text, including all of the text on the transitional provisions. The lazy barrister did not even include the transitional provisions in the draft Points of Claim, even though without them the Points of Claim were defective.

    The amount of unpaid wages claimed is $40,000. That is a lot of money for low income folk, yet it was difficult to get a law firm to take the case on- Maurice Blackburn turned us down, not because the case lacked merit, but because unpaid wage cases are complex and therefore expensive to run.

    Clearly the current system is a joke. The Fair Work Ombudsman runs only a very tiny number of cases each year, 100 or so, but the tens of thousands of other victims of wage theft have to fend for themselves. No doubt many business lawyers are advising their clients that the employee will almost certainly, due to the stress and cost of litigation, eventually agree to an out-of-court settlement for a pittance.

    To rub salt into the wounds, Deeds of Settlement invariably contain a clause in which the boss admits no wrongdoing and also a non-disparagement clause, i.e. a “gag clause”. In other words, the employee is barred from talking to anyone about what happened, even though their experience may have been horrific and talking about it would be psychologically beneficial. If they do talk, they are in breach of contract and if the boss finds out, they are liable to legal action.

  2. Hugo, you raise an important issue. It is not the absence of regulation but the costs of enforcement that is often the problem. The problem is not confined to Industrial Relations.

    Did your solicitor give you a cost estimate for an out-of-court settlement? Did the Statement of Claim include a claim for costs?

    Gag clauses should be outlawed.

    IMO, civil law enforcement is the area where income and wealth inequality have the most severe negative consequences. It goes beyond having little discretionary income, it goes beyond not having a car, not going on holidays, and shopping very economically. It goes to the core of equality before the law. It goes to human dignity.

    Have you noticed lawyers want to be paid by the hour and want to be a corporate business. (Which other business, setting aside the road toll companies, can avoid the risk of making a loss?) Have you noticed some of them want to offer financial advice?

  3. Hi Ernestine, thanks for taking an interest!

    An out-of-court settlement can take place at any time and you can’t know in advance how much work the lawyers will need to do. The best we can hope for is a reasonable settlement at a pre-trial court mandated mediation, which the lawyer says will probably be ordered in this case. If mediation is ordered, the barrister will charge for 1.5 days X $3,000 per day = $4500, the solicitor will charge at $450 and hour and the mediation fee is $535.

    If mediation fails (and according to the Fed Circuit Court annual report, mediation only succeeds 44% of the time in Industrial Law cases), that is ~ $6K wasted on top of the ~$6K spent just to get the application prepared and filed. In total that would be $12K sunk with no outcome.

    If I hadn’t spent a couple hundred hours coming to grips with the Award and calculating the entitlement on a 24 page Excel spreadsheet before even going to a lawyer, it would have been near impossible to run the case. Of course, if I hadn’t worked in payroll and with legislation prior to retirement, I doubt I could’ve done the calculations.

    No wonder hundreds of thousands of workers are denied super and minimum award wages. Employers are being rational when they take a risk and ignore the rules because they are very unlikely to be penalised.

    There has to be a better way than this. I doubt that anything short of jail time for major offenders, as well as repeat offenders, will make a difference.

  4. “I doubt that anything short of jail time for major offenders, as well as repeat offenders.”
    This would be called ‘boiling in oil’ in some applied game theory context.

    There is another factor that magnified income and wealth inequality. Employers can treat legal expenses as an expense item. This amounts to a tax subsidy. They therefore can offer higher fees to lawyers, at least equal to the tax subsidy.

    We have public education and public hospitals and this is good so because it puts a bound on the negative consequences of income and wealth inequality. It seems to me there should also be a public law office where lawyers are paid like doctors in a public hospital. I know there is legal aid but people have to be destitute to qualify for legal aid in civil cases.

  5. Good luck Hugo, you have my respect.
    I think it would kill me – or at the very least I’d end up as bitter with the legal process as I would about the wage theft. In fact I’d say left feeling treated like trash rather than bitter.

  6. Hugo Just read your 2nd reply. Sorry to go on a rant here and no doubt your lawyers are correct as to the reality of the situation. But, if this is just a case of you not being paid your salary as an employee, why the hell should the judge order mediation? There is no room for a misunderstanding in your employment contract – implied or the written parts. There’s no room for misunderstanding or ambiguity in any way, your employer is required by law to pay.

  7. MartinK: “But, if this is just a case of you not being paid your salary as an employee, why the hell should the judge order mediation? “

    They do it because litigation is hellishly expensive. According to the Federal Circuit Court Annual Report, only 10% of industrial law cases make it to a final hearing. It isn’t unusual for the parties to settle on the steps of the court only minutes before the trial is due to commence.

    As to expense, if we win $40K and also get $10K in pre-judgement interest and ~$20K in pecuniary penalties, we would still be in the red if the barrister/solicitor/court fees are at the upper bound of the solicitor’s estimate, i.e. $80K.

    BTW, it is my wife not me who was underpaid. As she has limited English, I’m liaising with the lawyers on her behalf.

  8. MartinK: “In fact I’d say left feeling treated like trash rather than bitter.”

    Oh but the story gets so much worse. The lawyer for the boss is currently being investigated by the Legal Services Board for intimidating and threatening my wife and I.

  9. Hugo, as the employee’s legal expenses relate to and are in pursuit of earned income those expenses surely should be tax deductible just as they are for the boss. (Are they?) If the legal expenses are more than income then the loss should carry forward into future years too as a deductible against future income just as it would for the boss. If that is not permitted then it shows how rigged the system is as the boss would have the state at the expense of all taxpayers investigate and prosecute a case of theft by an employee.

  10. Hi Svante,

    I found out that legal expenses incurred to recover unpaid wages are tax deductible. However, my partner now has a job that underpays her by an even greater margin than the previous one, plus she has cut down her work hours due to arthritis. Accordingly she has only paid $3K to $4K in tax the 2017/2018 financial year. This is much less than the legal expenses.

    I will have to find out from an accountant if and how the tax deductible legal expenses can be amortised. It would be great if they could be amortised retrospectively, over the years the wage theft took place. Thanks for reminding me to look into this:)

    Nonetheless, even with tax deductible legal expenses that can be fully offset against a past or future tax obligation, if the legal fees are at the upper bound of the solicitor’s estimate, we will end up in the red or at best, in the black by such a small amount that we would have been better off doing nothing.

    The exception is the recovery of unpaid superannuation, which was done by the Tax Office at no expense to ourselves. However the Tax Office will only recover unpaid super if you have records. If the boss pays you cash-in-hand and does not give you payslips, you’re screwed.

  11. You are going to try and claim you expenses back too? And stress and other damages?

  12. Martink,

    Industrial Law is generally a no costs jurisdiction. Costs are only awarded in a tiny minority of cases and you don’t get compensation for things like stress.

  13. I’ll make some broad observations.These will not help Hugo in his specific case.

    Join a Union the day you start work. As soon as you commence employment, commence keeping full and verifiable wage records. From the very first payday, you should check you are not being underpaid. These checks should continue for every payday. Maintain vigilance. As soon as a possible underpayment of wage is detected, immediate action should be taken. Advise your employer, your Union and the Fair Work Ombudsman. Keep full records and ensure all parties know that all other parties have been contacted.

    Through your Union and with your Union reps’ help demand an explanation of the pay discrepancy and full payment of any amount still owing under the relevant award. Don’t let the situation drag on and don’t avoid confronting your employer (calmly) if necessary. Have a Union rep in attendance if you don’t feel comfortable confronting a boss or a boss’s representative alone.

    This raises some issues. Union membership and representation may be difficult to impossible to organize in some jobs. Some bosses may sack you for standing up for your rights. You need to prepare for these eventualities if possible. Rules of thumb would include these. Never work where you cannot join a Union and be represented. Ensure your work performance and behaviour are of a good standard and give no pretexts for dismissal. Document all aspects of your case if you are sacked for merely demanding to be paid the award wage. Ensure Fair Work and Centrelink are appraised of the situation. Follow all avenues for unfair dismissal proceedings as necessary.

    In the face of an intransigent, bullying or blatantly unfair employer don’t be afraid to be (legally) confrontational. Don’t be afraid to be dismissed. You probably don’t want to work for such an employer anyway. Be up front with unfair employers in the following manner. Lay out in detail (well prepared beforehand) how it will cost them, organizationally, much more in time and money to treat you badly than to treat you well. Do it all in a calm voice and pitch it as a cost-benefit exercise for them. If they do cheat you and/or sack you, then follow up on your legal threats. Do everything you legally and safely can to make to matters as difficult as possible for that employer or business into the future and as long as your case lasts. But don’t lose money in your crusade. Do the legwork yourself, use free avenues and/or find a “champion” to help you be that a union rep., spouse or whomever. Even if you don’t win personally, you can leave that employer with a distinctly unpleasant experience which says “If I treat workers badly it can cause a lot of trouble and expense for me.” They’ll think twice before doing it again to someone else.

  14. Ikon,

    I certainly encourage joining the Union. But don’t just join, be active and encourage others to do so.

    Keeping records is absolutely crucial. If the boss insists on cash-in-hand payments and will not issue a group certificate or payslip- which was my wife’s situation for the first 3 years of her employment, you must keep your own records. Keep your own time and wage record. It only costs a few dollars to get a mini time and wage book from Office Works. Alternatively, download the FWO employee time and wage app.

    – Make sure you take some selfies in the workplace as I’ve read cases on Austlii where the boss has denied the worker ever worked for the company, or said they only worked for one year instead of 10 or so to get out of paying Long Service Leave!

    – Communicate with your boss by text message and print the messages out. A trail of text messages have proved vital in my wife’s case.

    – the Fair Work Ombudsman is a worry. I have little respect for that office because of the poor and incorrect advice that the poorly trained call centre staff give out. Nonetheless, establish a paper trail by making online enquiries, which are saved and can be printed off the by the FWO website at any time.

    – Be extremely careful about any one-on-one communication you or your rep has with the boss about workplace grievances. It is technically illegal in most states to record private conversations without permission but if you don’t you leave yourself open to being verballed, subject to false allegations, sacked or even worse ( sadly, this is my current situation!).

    – You can retrospectively claim benefits for up to six years after they are due under the Fair Work Act 2009. If you can afford it, it is well worth not actioning an underpayment complaint until the quantum of the underpayment has built up enough to give you some leverage over the boss. If you complain early, you’ll probably get sacked. The boss will gamble on you not enduring the expense, stress and waste of time involved in chasing a few hundred dollars through the court system and if you bother with an Unfair Dismissal claim you’ll get a pittance if your length of service is brief and your complaint will be a matter of public record, which may diminish your future employment prospects.

  15. Hugo – “The exception is the recovery of unpaid superannuation, which was done by the Tax Office at no expense to ourselves…”

    Well, the 15% super contribution tax is an expense paid by everyone (as are any taxes due on fund earnings and benefits). It is little wonder the system is rigged such that an arm of the state takes on the role of recovery here. To benefit who? It’s collected by the ATO from all contributions (plus earnings and benefits) and used to subsidise the related super tax avoiding boondoggle more than likely available to bosses by way of a high income situation.

  16. Hugo, good luck with your partner’s case. I hope she gets something at the end. I support your and Ernestine’s position on gag clauses, they should not be allowed. I unwillingly accepted one in a case I was involved in. I have now formally breached it, on principle, as I’ve reported here https://speakingfearlessly.blogspot.com/2018/02/why-i-am-breaching-my-confidentiality.html?m=1

    I strongly agree with Ernestine on the impact of inequality on civil cases. It was much more difficult for me to fight this case than for the respondents, who were all powerful and wealthy men. Even down to small details like them not having to attend mediation in person, the whole conduct of the case reflected their relative wealth and ‘importance’ – the theory that we are all equal before the law does not apply in practice.

    Good luck and you are doing a good thing in supporting your partner (and by example, other exploited workers) whatever the outcome.

  17. Thanks Val!

    In the civil system, all are not equal before the law. It is shameful that such a state of affairs exists in a rich democracy.

  18. I just read your story, Val. I’m sorry to hear about what you went through.

    I’m afraid my story is the opposite is some ways. The representations I made on behalf of my wife led to the (non-white) female boss and her daughter getting an intervention order against me. All they had to do was lie through their teeth to the (female) magistrate and turn on the waterworks. As a white middle-aged male, I now see that I was guilty before I even walked through the door. I represented myself at the hearing, which meant 6 hours of being mentally tortured by three women, one of whom was supposed to be impartial. I haven’t had a good night’s sleep in months thanks to that experience.

    The boss has to date forked out at least ~ $50K in an Unfair Dismissal deed of settlement, repayment of unpaid super and her legal costs. I suspect she’ll be ~ $150K to $200K out of pockets if our matter gets to a final hearing in the Federal Circuit Court. Thankfully I live 150km away from the boss, which I hope will protect me from more false allegations. But $150K is 150K reasons to be vindictive and to plot and plan, so I’m a tad paranoid these days.

    My understanding is that unscrupulous lawyers often advise women to use intervention orders for tactical reasons, especially if their adversary is male. Men don’t stand a chance in the current zeitgeist.

    My only consolation is that the lawyer for the boss put some nasty stuff in writing, so at the moment the Legal Services Board is investigating him for misconduct.

  19. On another tack, and seeing that there is no recent, current Sandpit that anyone will read.

    I think much more attention needs to be paid to thermoeconomics or biophysical economics. Joseph Tainter gives explanations about innovation and growth which are based on science, specifically on physical quantification of energy inputs but also on material inputs. Tainter presents research which shows that innovation is becoming increasingly costly and the rate of return from innovation is now declining. Scarcity of useful energies, useful materials and biosphere bioservices (especially the progressive loss of the benign Holocene climate) very likely are going to slow the world economy down and send it into degrowth.

    Conventional economics, sadly, is not a science and it cannot be made into a science. Rather than being called the Dismal Science it should be called the Dismal Non-science. Divorced as it is from physics and biology, economics cannot ever become a science except by bringing physical and biological principles, parameters and quantities properly into the discipline. Of course, the ideological and normative pressures against renovating economics in this manner are enormous. Conventional economics will not be renovated until the global crisis of capitalism brought on by its unsustainable production model.

    Philosophically and thence scientifically, the problem lies with the positions of Cartesian Dualism and mechanistic science which are implicit in conventional economics. Conventional economics adheres to a dualist conception of existence (two substances in substance philosophy in terms of “matter” and “mind”). Thence, humankind, as the only species on earth attributed with mind, will and ideas, is conceived as a species able to operate over and against nature (over and against the laws of physics and biology).

    What else could explain conventional economics’ rift from the real physical and biological world? What else could explain the ignoring of physical reality to the extent that the discipline acknowledges scarcity and yet talks of endless growth? Conventional economics essnetially states, “scarcity is the fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources”, and yet continues to talk of growth as we near limits to growth. There is never any talk in conventional economics of steady-state sustainable economics. There is talk of sustainable growth economics which is a complete oxymoron and impossibility.

    Conventional economics perforce must then posit an infinite substitution principle and decoupling from material and energetic inputs to escape the basic limits to growth reality. However, substitution itself is partial and limited as is decoupling. Humans are material beings. Their basic needs (water, food, shelter, sanitation) cannot be decoupled from material production. Large concentrations of humans in cities require extensive civil material infrastructures, energy inputs and vast agricultural hinterlands to live in such crowded conditions. These material needs cannot be infinitely substituted and cannot be decoupled from physical energetic and material requirements.

    Conventional economics, being an ideology and perhaps even a religion, decoupled itself sophistically and unscientifically from the real world. Economics must be renovated into a biophysical discipline. Conventional economics offers no answers for our contemporary dilemmas.

  20. Oops, strike out my first sentence in my post above. I thought I was posting in Monday Message Board. After a brain fade and mis-click, I thought the only Sandpit available was one much older than this one. I am not saying nobody will read this full thread. I am not being critical of posts above mine. Indeed, this is all obvious as I have contributed positively to the wage theft and legal process discussion.

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