The Federal Court of Australia has upheld an appeal from the Industrial Magistrates Court of Western Australia, finding that an employer (“Employer”) had failed to disprove underpayment allegations made by a pair of former employees (“Employees”).
In doing so, the Court considered section 557C of the Fair Work Act 2009 (Cth) (“FW Act”), which places the burden of proof on an employer to disprove allegations of certain contraventions of the FW Act in circumstances where the employer has failed to keep and maintain proper records, or give proper pay slips to its employees.
The central issue for the Federal Court, in Ghimire v Karriview Management Pty Ltd (No 2)  FCA 1627, was whether or not the Employer had, as a matter law, properly discharged the burden of proof placed upon it, under section 557C of the FW Act.
On assessment of the reliability and credibility of the Employees and the Employer, in addition to assessment of the material, the Magistrate in the Primary Decision held that the respondent had proven that the Employees had not worked some of the hours that had been claimed.
On assessment of the reliability and credibility of the Applicants and the Respondent, in addition to assessment of the material, the Magistrate in the Primary Decision held that the respondent had proven that the Applicants had not worked some of the hours that had been claimed.
On appeal, the Federal Court of Australia held that it was not enough to discharge the reverse onus of proof merely because there might have been reasons to question the credibility of the account given by the Applicants (“Appeal Decision”).
In relation the application of section 557C of the FW Act, and the reversal of the onus of proof under the FW Act, the Court stated that “Section 557 provides for more than an evidentiary burden on the defaulting employer when it comes to an absence of records. It is not a mere reversal of the evidentiary onus…. section 557 states expressly that the defaulting employer bears the burden of disproving the allegation.”
Further, the Court reasoned that, even if the Employees’ evidence had not been accepted, the Employer would not have automatically disproved their allegation as to the hours that they worked. Interestingly, the Court considered, but made no finding on, whether or not there existed a requirement that an allegation had to be made “reasonably or bona fide” in order to enliven section 557C of the FW Act.
Ultimately, the Court found that the evidence given by the owner of the Employer could not directly establish the hours the Applicants had, in fact worked, particularly given the owner’s evasive and vague evidence showed that the Employees’ work hours was a matter not known to the owner.
On this basis, the Court held that the evidence given by the Employer “was plainly insufficient as a matter of law to discharge the burden of disproving the allegations at to hours worked.” Consequently, the Court ordered that the Employees be paid their wages owing, being $10,371.02, plus interest.