Queensland commission reveals what's needed for legal wage deductions
The Queensland Industrial Relations Commission (QIRC) recently dealt with a dispute over unpaid wages where a worker sought to recover money withheld from his final pay. The case highlighted the limits of employer deduction powers, even when contracts contain clauses permitting such deductions.
The worker argued that his employer had failed to provide the promised standard of accommodation and internet access when he relocated for the position. Despite signing a Letter of Appointment with deduction clauses, he maintained this breach of undertakings undermined the enforceability of certain terms.
The dispute raised important questions about the proper authorisation needed for wage deductions and the protection of minimum statutory entitlements under the Industrial Relations Act 2016 (Queensland).
The worker started employment with a local council as manager infrastructure delivery on 1 September 2023. He signed a Letter of Appointment containing terms and conditions including provisions about relocation expenses.
The employer paid $3,788.74 to cover the worker's relocation to Mornington Island, a remote location in Queensland. According to the employment contract, if the worker left voluntarily before completing 12 months of service, he would need to repay a percaentage of these expenses.
When the worker resigned on 20 December 2023, still within his six-month probationary period, the employer withheld the relocation amount from his final payment. This prompted the worker to file an application with the QIRC under section 475 of the Industrial Relations Act 2016, seeking recovery of $3,105.97 in unpaid wages and entitlements.
Before accepting the position, the worker was promised suitable accommodation with internet access, an important consideration given the remote island location of the workplace.
In his evidence to the Commission, the worker stated: "During the interview process the [employer] advised that [the worker] would be supplied a house and internet. Upon arrival, [the worker] and his partner were provided with accommodation in a dilapidated Donga without internet."
He further claimed that after complaining about these conditions, the employer promised repairs would be completed while he was on leave. However, upon his return, no repairs had been carried out.
The worker also noted that when his resignation was discussed with senior management a week before his employment ended, no one mentioned any requirement to repay relocation costs.
The council's HR manager acknowledged in his evidence that accommodation options were limited on the island.
"At the time of [the worker's] commencement there was a lack of available housing or accommodation and as a result, [the worker] and his partner were provided with accommodation in a Council owned Donga," the human resources manager stated in his affidavit to the Commission.
He confirmed the worker had reported concerns about the accommodation and that work on improvements had begun during the worker's leave period but faced delays. "Due to the remote location and staff shortages, [the employer] experienced difficulties in completing the remaining work," the human resources manager explained.
Regarding internet access, the human resources manager noted that while services were available on the island generally, "the location of [the worker's] Donga did not permit this. There were, however, other locations and areas where he could access the wi-fi and internet services either from his computer or mobile phone."
The employer relied on specific clauses in the Letter of Appointment to justify withholding funds from the worker's final pay.
One clause stated: "Where the officer ceases their employment voluntarily before 12 months service is completed, the officer will be required to pay back to MSC, a percentage of the relocation expenses paid by Council in accordance with Council's Relocation and Repatriation Policy."
Another clause specified: "During the course of your employment and on termination, you authorise and permit Council to deduct from your remuneration or accrued entitlements, the value of any debts (including but not limited to leave taken in advance and unreturned goods) you have incurred to the Council."
The council's Relocation and Repatriation Policy required workers who resigned during their probationary period to repay 100% of relocation expenses provided by the employer.
Section 371 of the Industrial Relations Act 2016 was central to the Commission's decision. The QIRC said that this section governs when employers can make deductions from wages and requires specific authorisation.
The Commission examined whether signing the Letter of Appointment constituted proper consent for the specific deduction that occurred. The Commissioner determined it did not.
"I am not persuaded that the act of signing the Letter of Appointment alone demonstrates genuine consent for the deduction. A blanket acceptance of the 'terms and conditions' of employment of this type does not reflect consent for the specific deduction that ultimately occurred," the Commissioner stated in the decision.
The Commission emphasised that annual leave entitlements must be paid upon termination according to section 38 of the Industrial Relations Act 2016, and cannot be subject to unauthorised deductions.
"In circumstances where the amount deducted from [the worker's] final pay included annual leave entitlements related to minimum conditions contained in the Queensland Employment Standards, I am not of the view that such a deduction is lawful," the Commissioner wrote.
The decision further explained: "It cannot be the case that an employer can satisfy an alleged debt owed by an employee by making a unilateral deduction of entitlements accrued in accordance with the legislative minimum employment standards. Such an interpretation is inconsistent with the purposes of the IR Act."
The Commissioner concluded that specific consent was required under section 371(5) of the Act, which states: "If an employee's consent authorising a deduction to be made from wages is not written, before making the deduction, the employer must give the employee written acknowledgement of the consent." No evidence showed this requirement had been met.
The final order directed: "Within 21 days of the date of this decision, [the employer] to pay [the worker] the full amount of unpaid wages and annual leave entitlements accrued as at the date of termination without deduction, subject to the appropriate taxation."
