In Wardman v Macquarie Bank Limited (2023), the Federal Circuit Court of Australia had to rule whether a fixed component of a commission structure that was paid in the same amount each month could be treated as salary. If so, it would discharge the employer’s award obligation to pay minimum rates of pay and the Fair Work Act 2009 (Cth) (FW Act) obligation to maintain the employees’ base rates of pay during periods of annual leave and public holidays.

The Court interpreted the employment contracts and ruled there was a sufficient correlation of purpose between the nature of the award obligation to pay minimum wages or salary, and the contractual obligation to pay a base salary, such that the payments of the latter are to be applied in discharge of the former.

The Wardman decision also dealt with the question of whether deeds of release entered into by employees with their employer were effective to release their employer from liability for non-compliance with FW Act obligations. (A similar question was considered in the decision of the Supreme Court of Victoria that allowed an ex-employee to sue their employer despite entering into a deed of release, which was explored in a recent Workplace Bulletin.)

If an employee claims the employer has not paid all it should towards their statutory employee entitlements, the employer and employee can settle this claim by entering into a deed of release. However, they cannot make a release agreement that would see the employee contract out of the statutory entitlement.

In the Wardman decision, the Court ruled there was nothing contained in the deeds that pointed to a dispute between the employer and employee when the deed was executed concerning entitlements under the FW Act. The employees were not aware they had a basis for a claim of FW Act contravention when they made the deeds. Therefore, the Court ruled the deeds were not made as part of a settlement of FW Act claims. Instead, they sought to contract out of statutory entitlements and therefore could not be enforced to prevent the employee bringing FW Act claims.