The managing director played a role in withholding bonuses and authorising unlawful deductions
The Federal Court ruled that a financial services company unlawfully withheld bonuses, made unauthorised salary deductions, failed to provide compliant pay slips, and neglected long service leave entitlements, holding its managing director personally liable for certain breaches under the Fair Work Act 2009 (Cth).
The court determined that the company, Fortrend Securities Pty Ltd., unlawfully withheld bonus payments owed to two former employees. Their contracts specified that once the company earned a minimum commission threshold, a bonus would be payable—half the following month and the remainder after seven months. The company argued that if an employee resigned before the seven-month period ended, the unpaid portion was forfeited.
The court rejected this argument, ruling that s 323(1) of the Fair Work Act mandates that bonuses must be paid "in full" and "at least monthly." The attempt to withhold bonuses already earned was deemed invalid. The company did not dispute the amount owed, which totalled over USD 38,000.
One of the employees also successfully claimed that the company unlawfully deducted amounts from monthly wages without proper authorisation. In 2015, a deduction was made to cover business travel expenses. When questioned, the managing director responded that future deductions of $500 per month would be allocated to a client entertainment and travel fund.
The court found no contractual basis for these deductions and ruled they were not made for the employee’s benefit, as required under s. 324 of the Fair Work Act. The deductions continued until the employee resigned in 2022, totalling $46,837.95. However, due to statutory time limits, only $29,500 was recoverable. The court classified this as a serious contravention, given the systematic and deliberate nature of the deductions.
The company also breached s. 536 of the Fair Work Act by failing to provide timely and compliant pay slips. Evidence showed that employees did not always receive pay slips, and when issued, the documents lacked key details, such as salary breakdowns and deductions.
The managing director denied responsibility for issuing pay slips, stating that payroll matters were handled by an office manager. The court accepted this and ruled that while the company was in breach, the managing director was not personally liable.
The company was found liable for failing to pay long-service leave entitlements under the Long Service Leave Act 2018 (Vic). It argued that the employees were full-time workers with fixed salaries and that their entitlements had been assessed by Wage Inspectorate Victoria.
The Federal Court rejected this, finding that the employees’ earnings varied due to commissions, meaning their ordinary time rate of pay had to be calculated differently. The company was ordered to pay over $109,000 to one employee and $136,000 to the other in outstanding long service leave.
Under s. 550 of the Fair Work Act, individuals can be held responsible if they are "knowingly concerned" in contraventions. The court found that the managing director played a direct role in withholding bonuses and authorising unlawful deductions. However, there was insufficient evidence to prove involvement in the pay slip breaches, so no liability was imposed on that issue.
