Firms that historically paid a large proportion of adviser salaries on commissions could owe staff millions of dollars in back pay after a court ruled late last year that Macquarie Bank had underpaid entitlements for a number of former representatives, a workplace lawyer has said.
WilliamsonBarwick solicitor and director Adrian Barwick, who brought a successful case on behalf of former Macquarie advisers that saw the bank ordered to pay hundreds of thousands of dollars in compensation for unpaid leave entitlements, said the ruling from the Federal Court had set a precedent that could see similar cases brought from advisers paid on commission.
“WilliamsonBarwick is fielding confidential enquiries from advisers in a number of financial services and advice businesses,” Mr Barwick told ifa.
“Although the precise contractual terms may vary from business to business, there is evidence the practice is fairly widespread across the financial services industry.”
The case had centred on the fact the bank had tried to use bonuses and commissions earned by the advisers over the course of their employment with Macquarie to offset their base salary, which the court found was in contravention of the Fair Work Act.
Mr Barwick said if a practice had a similar structure in place, the problem was likely to extend across all staff.
“Because businesses tend to impose standard employment agreements for all their advisers, if there is an underpayment issue, the financial impact on the business is multiplied,” he said.
“In many cases this could run to millions of dollars. However, there is a six-year time limit to commence a court application for underpayment of entitlements, which provides some protection to a business from historical underpayment practices.”
Mr Barwick said for advice businesses that could be at risk of similar action, it was critical to be proactive in identifying and addressing any underpayment issues.
“If a firm is concerned it may have underpaid employees, it is best to take a proactive approach of identifying the underpayments and voluntarily addressing the issue directly with affected staff; this may assist to head off court proceedings and the potential imposition of court-ordered pecuniary penalties,” he said.
“This requires courage but is the right thing to do.”
Mr Barwick said practitioners who believed they may have been similarly underpaid in a previous role should seek legal advice or contact the Fair Work Ombudsman.
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