Debt • Disputes • Advisory
When can an employee ask the Court to impose penalties on an employer?
Learn more about why an employee may seek penalties, how penalties differ from compensation, and why the statutory maximum is only the starting point.
Workplace Law
Key takeaways
The TLDR:
Employees can ask the Court to impose civil penalties for an employer’s breach of a civil remedy provision, in addition to their other claims for relief.
However, establishing a breach of a 'civil remedy provision' in the Fair Work Act 2009 (Cth) does not guarantee that a penalty will be imposed or that the Court will award any penalty it imposes to the wronged employee.
When determining the penalty, the Court identifies and groups all the contraventions, considers overlap between them, assesses their objective seriousness against the surrounding circumstances, and then reviews the overall penalty in its 'totality' for appropriateness and proportionality.
While the statutory maximums provide an important reference point, the ultimate question is what penalty is appropriate to achieve deterrance.
Early legal advice can assist an employee to identify the correct civil remedy provisions, preserve evidence, and present an appropriate and proportionate application for civil penalties relief.
Why seek a civil penalty?
When an employer breaches certain provisions of the Fair Work Act 2009 (Cth) (FW Act), additional financial penalties might be imposed. An employee can apply for any penalties awarded to be paid to them directly, in addition to receiving compensation for other losses.
In appropriate cases, an employee can ask a court to impose a 'civil penalty' on the employer, and on individuals involved in the contravention, under s 546 of the FW Act.
Civil penalties are a remedy that serve an altogether different purpose from compensation.
They are not calculated simply by asking how much the employee lost in monetary terms. Their principal purpose is to promote compliance with Australian workplace laws by imposing a significant financial deterrent on employers who have disregarded the workplace protections usually afforded to employees in Australia, for their own benefit.
The 'deterrent' purpose of civil penalties is important to remember ‒ because an employee might establish a technical contravention of a civil remedy provision without obtaining any penalty. For example, where the employer's conduct was inadvertent, unintentional and unsystematic, or where an employer quickly corrected a breach after becoming aware of it.
Conversely, in cases involving serious, intentional and systematic contraventions, significant penalties may be imposed, even if the employee’s financial loss is modest.
What is a 'civil remedy provision'?
Not every employer obligation under the FW Act carries a civil penalty. A penalty can only be imposed if the contravened provision has been designated as a 'civil remedy provision'.
Common examples of civil remedy provisions in the FW Act include provisions dealing with:
adverse action and the general protections;
coercion in relation to workplace rights;
false or misleading representations about workplace rights;
payment of wages and other employment entitlements;
compliance with the National Employment Standards ('NES');
compliance with modern awards;
record-keeping and pay slip obligations; and
unreasonable requirements that an employee spend or repay money.
Section 539 of the FW Act identifies which provisions are 'civil remedy provisions', who may apply for them, and sets the maximum penalties that can be awarded.
For example, if an employer has breached s 293 of the FW Act (by paying its employee below the national minimum wage), then as well as awarding the employee compensation for unpaid wages, further civil penalties could be imposed up to a maximum of 60 penalty units against individuals or 300 units against a company, per breach.
If these are 'serious contraventions', then even higher penalties of up to 600 penalty units for an individual or 3000 penalty units for a corporation can be awarded, per breach.
Putting that into perspective, since a Commonwealth penalty unit is currently $364 for offences committed on or after 1 July 2026, this means that a court could impose penalties of up to $218,400 against individuals, and $1,092,000 against a company, per breach.
Since an employer could contravene the FW Act in every pay cycle that their employee remained underpaid - the total penalty might become ruinously large, very quickly.
Do employees have standing to seek penalties?
In many cases, yes.
Although the Australian workplace regulator, the Fair Work Ombudsman, frequently exercises its statutory power by bringing its own civil penalty proceedings against contravening employers when it believes a breach has occurred, the FW Act also permits certain affected employees, unions, and other eligible persons, to apply for penalty orders.
Section 546 of the FW Act allows penalties to be awarded to a 'particular person' in addition to any other remedies available to that person under section 545. Once awarded, the person has a statutory power to recover the penalty as a debt: s 545(4) FW Act.
An employee's claim for civil penalties can therefore readily run alongside their existing workplace claim for more common forms of relief, such as:
payment of outstanding wages or entitlements;
compensation for financial or non-financial loss;
interest;
an injunction or other corrective order; and
reinstatement, where appropriate.
Are penalties always awarded?
No, civil penalty awards are not automatic entitlement.
While an employee can apply for a civil penalty to be imposed and paid to them, the penalty is discretionary, and is not the employee's automatic entitlement merely because they commenced the proceeding and proved that a contravention had occured.
The decision about who any penalty should be paid to ultimately is a matter for the Court.
This is because civil penalties are imposed in the public interest to secure compliance and deterrence, and the Court has a wide discretion to direct where that penalty should be paid to best serve the public interest. But often, this means directing it be paid to the employee.
How does the Court determine an appropriate penalty?
At a high level, that process generally involves the Court asking five questions, as helpfully set out by his Honour Bromwich J in FWO v NSH North Pty Ltd [2017] FCA 1301 at [36]:
1. What contraventions, and how many of each, have been established?
2. Should repeated breaches be treated as one 'course of conduct' under s 557 FW Act?
3. Is there overlap between the contraventions in a way that warrants a penalty reduction?
4. What penalty is appropriate for each contravention or group of contraventions, based on their objective seriousness, taken in isolation?
5. Then, applying the 'totality principle', are the final penalties being proposed ultimately appropriate and proportionate to the wrongfulness of the acts, when viewed as a whole?
For selected civil remedy provisions, statutory penalty caps may also apply.
Can directors or managers also be ordered to pay penalties?
Yes, they can - under a statutory principle known as 'Accessorial Liability'.
Critically, section 550 of the FW Act can extend liability to a 'person involved' in another person’s contravention. Depending on the evidence, this may include a director, manager, payroll officer, human resources professional, accountant or another participant.
Holding a senior position is not, by itself, enough. The applicant ordinarily needs to establish the person’s relevant knowledge and participation in the essential elements of the contravention.
If personal involvement is established, the Court assesses that individual’s culpability and penalty separately. It should not simply impose a fixed fraction of the company’s penalty without considering the individual’s own conduct and circumstances.
The Fair Work Ombudsman similarly identifies directors, managers, human resources managers, accountants and businesses within a supply chain as examples of persons who may face proceedings where they were involved in a company’s contravention.
This article provides general information only and is accurate only as of the date of publication. It does not constitute complete or tailored legal advice. Employment law claims, remedies, time limits and penalty provisions often depend on the particular facts of each case, as well as the law that was in force at the relevant time. You should obtain legal advice about your circumstances before commencing or responding to proceedings.
Speak with Marcus for more information.
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Marcus Vella is the Principal Lawyer of Vella & Co Lawyers.
Marcus has nearly a decade of experience advising and acting in complex disputes, regulatory matters, and high-value claims. He has worked in leading Australian law firms and in-house with major Australian financial services businesses.
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