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Landmark case allows the most vulnerable workers greater access to justice

A recent FCFCOA decision may not be a magic wand, but it is certainly a step in the right direction for workers, writes Gabrielle Marchetti.

user iconGabrielle Marchetti 17 June 2022 The Bar
Gabrielle Marchetti
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As principal lawyer at JobWatch, an employment rights community legal centre, I represent some of the most vulnerable workers in Victoria – migrant and visa workers, international students, women experiencing family violence and workplace sexual harassment, and more.

I often find myself working on underpayment cases for these clients, where the company that was the employer no longer has any assets – usually a strategic decision by the company directors. The company may have gone into liquidation, or it may have been deregistered, or it may have been stripped of its assets so that it’s just a shelf company. In all of these scenarios, it becomes almost impossible for our clients to recover their owed entitlements.

Up until recently, even if our JobWatch clients had succeeded in arguing that they were owed employment entitlements in the small claims jurisdiction of the Federal Circuit and Family Court of Australia, they may never actually recoup their entitlements. That is because the court order would have been issued against the employer and, if that legal entity had no assets or no longer existed, then our clients were stuck with nowhere to go. 


This was particularly galling in circumstances where the company director(s) seemed to walk away scot-free and may have gone on to underpay other vulnerable workers if they subsequently set up phoenix companies.

In these situations, our clients have resigned themselves to the fact that while they’ve won the court order and had their employment rights vindicated, they haven’t actually recouped their entitlements. Those who were here as migrant and visa workers have left Australia with empty pockets and, often, a bitter taste in their mouth, having had hopes of lawful and gainful employment in our country but were let down by a legal system that seemed to allow bosses to get away with underpaying their workers.

However, change is afoot. In future, workers across Australia who have been underpaid and who want to use the court’s small claims jurisdiction to recover up to $20,000 in employment entitlements will be able to ask the court to make an order not only against the employer (be it a company, a partnership, or a sole trader) but also against any third party who was knowingly involved in the underpayments.

After months of strategic litigation that was pursued by JobWatch, the court recently handed down a landmark decision – Alvarez Nino v Kuksal [2022] FedCFamC2G 401 – which recognises the court’s power to make compensatory orders against third parties, even in small claims matters. This overturns the former legal precedent of Beer v Lim & Anor [2012], which was binding on the court for the last decade.

At JobWatch, as I’m sure is the case with community legal centres across the country, we have several clients who have been waiting for this decision before proceeding with their small claims applications. They can now go ahead and list any third party who they believe was involved in the underpayments as respondents to the applications. Importantly, they can ask the court to make orders for compensation against those third parties, as well as against the employer. In my view, this will result in greater access to justice, with more people actually receiving the compensation that’s been ordered by the court.

Unfortunately, for several of our clients, this decision comes too late. Those who already have court orders but haven’t received their entitlements are left in the same limbo of knowing that they have no way forward, and no way to recoup what they are owed.

I know that this decision is not a magic wand that will solve all the issues with underpayments of vulnerable workers at once. But what it does do is provide underpaid workers with certainty that by pursuing both their employer and any accessories to their small claims applications, they are increasing their chances of actually recouping their entitlements. This is definitely a step in the right direction in the battle against widespread exploitation of vulnerable workers in Australia.

Gabrielle Marchetti is the principal lawyer at JobWatch.