Employer sued for cutting $200k job to $40k during COVID

Maurice Blackburn has launched a landmark Federal Court case that will test employers’ powers under the JobKeeper rules, alleging that a finance company used the scheme to slash an employee’s pay by more than $150,000 despite his workload staying busy.

The plaintiff firm alleged that finance broker Mark Cornell’s pay was unlawfully slashed from more than $200,000 to just $40,000 – the annualised equivalent of the JobKeeper payment of $1500 a fortnight under the guise of COVID-19 and JobKeeper.

The action could prove to be a test case for elements of JobKeeper that have confused employers and employees alike.

“In this case, the Federal Court will be asked to adjudicate on the requirements that an employer must meet to qualify for JobKeeper and whether lawful directions were given to employees,” Maurice Blackburn principal Josh Bornstein said.

“When the legislation came in, there was a fair bit of confusion. Employers were approaching me with all sorts of strange and interesting stories and it was clear to me that the legislation wasn’t well understood.”

He said employers’ understandings of their JobKeeper obligations had improved since the scheme’s launch.

“Certainly at the start, there was a flurry of employees coming forward with different examples of abuses [of the JobKeeper rules] and non-compliance, but my sense is that it has calmed down since then.”

The statement of claim filed by Maurice Blackburn argued that Mr Cornell’s employer, Mildura Finance, and its CEO, Brad Crinion, breached the Fair Work Act’s requirements around “JobKeeper directions” and repudiated his employment contract in doing so.

Profit-sharing

Mr Cornell claimed that business in his area of Mildura Finance did not drop off enough during COVID-19 to warrant the pay cut.

But he said that when he raised this concern with Mr Crinion, he was told that it “didn’t matter” that his division was unaffected by COVID-19 as “everyone’s going to have to do it”.

He claimed that Mr Crinion told him that departments that generated income and profit would have a separate monthly profit-sharing arrangement paid in addition to JobKeeper.

But, when Mr Cornell asked for confirmation of the arrangement in writing so he could get legal advice, he alleged that Mr Crinion responded: “With the way things are moving at the moment, the legal industry is changing every day, who knows what’s right and what’s wrong? We’re not required to put anything in writing.”

Mr Cornell alleged that when he rejected the cuts, Mr Crinion told him that “if everyone didn’t agree, the business goes into hibernation”.

According to the statement of claim, these actions showed that Mildura Finance did not consult Mr Cornell, provide him with three days’ notice of the cuts or impose the cuts reasonably, as required by the JobKeeper rules.

Its conduct was made further unreasonable, Mr Cornell alleged, by requiring that all staff “would continue to work the required hours to complete their relevant workloads”.

At the same time, the firm made it impossible for him to fulfil his obligations to clients by reducing his hours from full-time to 18 hours a fortnight, he said.

Mildura Finance disputed Mr Cornell’s allegations, saying his pay was not cut by 80 per cent and that revenue in his part of the business had dropped by 50 per cent.

Despite this, the firm said it kept Mr Cornell on his pre-COVID salary as he had not agreed to the pay cut. An administrative error meant he was underpaid on one occasion, but Mildura Finance said this was immediately rectified.

“At no point was the business trying to exploit staff under the guise of COVID. In fact, we have done everything to protect the business and keep all employees in a job during, and following this period,” the firm said in a statement.

Mr Cornell is seeking penalties and compensation for breaches of the Fair Work Act and damages for breach of contract.