UNDERPAYMENT OF WAGES: WHAT IF YOU'RE JUST "HELPING OUT"?
Have you ever done some voluntary work experience for a business? Or just put in a bit of your own time to help out? This type of unpaid work is great to get experience in your chosen field, but it can also create legal problems if you thought you were going to be paid but the business claims that you were working for free.
A recent case considered a similar scenario in which a woman agreed to assist a small business. She claimed that she was owed around $44,000 for work done, but the business claimed that she was just there to assess whether she would buy the business. It said that it owed her nothing. Here’s how this issue was considered.
Background – Is there an underpayment of wages claim?
The woman claimed that she was employed by the real estate business for 9 months in 2015. The business denied this and said that she was only casually employed for a few weeks in December 2015. The rest of the time, she wasn’t employed at all.
The woman said that the business owner had asked her to work for the business and she had agreed. She provided him with a handwritten quote of her rates for full time work and casual work. Following a further meeting, she agreed that she would continue to work in the business with a view to buying in as a partner. In the meantime, she would continue to work and the money owing to her would be deducted from the purchase price if she decided to buy in. If she decided not to proceed, the business owner agreed to pay her all of the outstanding money.
The woman proceeded to set up various systems so that the businesses property management activities were more efficient. She also kept diaries of the time that she worked. During this time, she asked on several occasions to see the business’ financial records. They were never provided.
She had a meeting with the business owner and his lawyer. She reiterated that the agreement was that money owing to her would be deducted from the purchase price. The lawyer later confirmed this in a joint email to her and the owner.
After some time, the woman had decided not to go ahead with the purchase. Still, she hadn’t been paid. She had provided details of the payments due to the owner and also copies of her time records.
Eventually, she decided not to return to work and made an underpayment of wages claim against the business.
The business owner argued that the business’ relationship with the woman wasn’t an employment relationship. Rather, she was spending time in the business as an exercise in due diligence to work out whether she would buy in as a partner. The few payments that it had made to the woman were voluntary and a sign of good faith.
The Court said that there were many inconsistencies in the arguments made by the business owner. For example, witnesses had alleged that she was always calling in sick. This didn’t fit with the business owner’s claim that all she was doing was undertaking due diligence. If this were the case, there would be no expectations that she should be in the office.
The business owner claimed that he hadn’t seen the woman’s time records until the case went to court. The Court rejected this, saying that there was enough evidence to prove that he had.
The lawyer’s email confirmation of the need to adjust the purchase price also contradicted the business’ claim that she was only there to undertake due diligence. And there were a series of text messages from the owner to the woman that confirmed his awareness that he owed her money for the work that she had performed.
The Court found that because the woman decided not to buy into the business, she was entitled to be paid for the hours that she had worked.
It ordered the business to pay the woman $44,000 plus interest.
What does it mean?
Even though these circumstances aren’t a typical underpayment of wages scenario, there are valuable lessons to be learned.
One of the reasons that the woman was successful was that she was able to produce a significant amount of evidence that supported her claim. For example, she relied upon:
- Text messages between her and the business owner.
- Emails between her and the business owner, as well as the business’ lawyer.
- Her own records of the time she had worked and duties performed.
- Copies of handwritten documents that she had given to the business owner, quoting her fees and setting out her claim.
Even though the business had called a number of witnesses to support its argument, the woman’s careful record keeping meant that she was able to produce documents that formed a weight of evidence and were very persuasive.
If you believe that you are entitled to be paid, or believe that you are being underpaid, a crucial first step is to gather all the evidence – all the documents that support your position. This includes text messages on your phone. It may also include social media posts.
Getting legal advice from an experienced employment lawyer is also important so that you know the type of information you should be collecting and so that your lawyer can assess your chances of success if you decide to make a legal claim.
If you believe that you have been underpaid, you should seek legal advice as soon as possible. Websters Lawyers has a great team of employment lawyers who can help you every step of the way. Contact us today for a free first consultation.
Crisoforou v Martin & Martin Real Estate (SA) Pty Ltd  SAET 107 (8 September 2017)
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