Queensland businesses could be hit with $200 million in back-pay claims from apprentices: SMEs urged to review staff records

Small businesses are being urged to seek advice and check records of former employees after a Federal Court decision on the wages of apprentices in Queensland will mean these workers must be paid under the federal award, rather than at state-based award levels.

On Monday the Federal Court in Brisbane dismissed claims from All Trades Queensland, Master Builders Queensland and the Housing Industry Association that apprentices in the state should continue to be covered by a range of state-based agreements rather than the federal modern award.

The associations were seeking to overturn a 2016 decision by the Fair Work Commission that ruled Queensland-based award wages for apprentices should not have been paid since the end of 2013, and from this point on workers should have been paid under the national modern award for their work, rather than through any other agreements.

The Queensland arm of the Electrical Trades Union has been fighting for what it says are 4000 apprentice employees in the state who have been paid $8.75 an hour because of the situation, when they should have been receiving $12.66 an hour from the start of 2014 under the national award.

ETU Queensland apprentice officer Scott Reichman has told The Australian the organisation will now be seeking backpay for these workers, which could amount to $70 million.

“For years, apprentices in Queensland have been paid less than those in every other state because of this kind of underhanded behaviour. Today’s ruling means that we can seek wage justice for these young people,” Rechman said in a statement.

However, the decision also relates to a number of other state-based awards, including employees in building and construction, civil construction, engineering and furniture and allied trades.

Union officials have told the ABC the fallout from the decision will also mean trainees and apprentices in sectors like hairdressing will have to be paid under federal awards, with the overall amount of potential backpay across sectors tipped at up to $200 million.

In response to the decision, Master Builders Queensland warned the decision will “put at risk the ability for Queensland to have the number of qualified tradespeople” the state will need in future.

Master Builders chief executive Grant Galvin said in a statement yesterday that businesses in the state had previously been advised by the Fair Work Commission to pay apprentices under the state-based awards, yet these agreements had now been found void.

“While the decision brings to an end more than 12 months of confusion and uncertainty, it also means apprentices pay rates, particularly for those in their first and second years, have been out by 10-15%. Employers will now have to pick up the difference — even though they’ve been advised they were doing the right thing all this time,” he said.

The case shows the importance of record keeping for small businesses, says Holding Redlich Partner Rachel Drew, who tells SmartCompany businesses in the state may now be approached by apprentices with back pay claims if they employed them between 2014 and today.

“If a business is operating in this space and was approached by an apprentice who had been working for them some time in the past four years, they will have to check the records,” she says. 

She recommends businesses obtain independent advice so they can know straight away whether there is a chance they will have to pay backpay to current or former staff.

“From here there will be questions about underpayments, and whether employers should be voluntarily repaying these, so get some advice,” she advises.

Industrial relations moves quick, so keep detailed records

The Federal Court decision is a reminder to businesses that workplace law is not static, says Drew, and business owners should be keeping up with their obligations on entitlements as well as their record-keeping.

“It’s very important for all employers to keep accurate time and wage records for about seven years,” she advises. 

While some may think payment levels and entitlements stay static for decades, in reality “industrial laws do change a lot,” Drew says.

If employers in Queensland are currently paying workers under one of the state-based agreements that has been thrown out by this decision, they should be updating their pay rates immediately, Drew says.

Possible claims of backpay from past or current employees illustrate the importance of maintaining secure data on who worked in your business and when, to ensure you have the right details to deal with each individual case, she says.

“It’s really essential to keep those records.”

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