Tricky backpay situation

[HRHenry]

Good afternoon, I work for a recruitment company that supplies numerous staff to company X. My predecessor set up the deal with them and we have been supplying them staff for many years at level y.

Recently we've been made aware that because of certain duties our staff perform at company X, our staff should be paid at level Y.2. I can't find any documentation from Company X that directs us to pay at level Y, it's just been that way for many years. Company X is certainly aware that we pay level Y, as we put that on our invoices.

To complicate matters further, the casual hourly rate that we currently pay (level Y) represents an above award payment, in line with Company X's current Enterprise Agreement. As we're not party to that agreement I initially thought that we would have no obligation to backpay our staff - as the hourly rate of Y is well above the award rate for either level Y or level Y.2. However, there is a clause in Company X's EA which states that employees of labour hire agencies are to be paid at the same rate as if they'd been a direct employee of company X.

So, are we obligated to backpay our existing and past staff who worked there?
Thanks
Henry

[Cottoneyes]

My initial thoughts are yes, however if the EA was not made aware to your firm prior to placing any individuals, or came in since and you were not informed of this, you have a clear case to on charge the extra back to company X. Think you would need some legal advice on both issues though to be sure

[Qld IR Consultant]

I've had this exact same issue with a client. In short yes you are obliged to pay it even though you are not party to the EA, and it would be within your right to charge that back to the client if it was not disclosed when the contract was made. However in order to maintain the relationship with the client i suggest you talk to them about it and come to a common understanding.....why do I get a gut feeling that it was an NUW agreement?!

[ausjus]

The casual rate is the rate stipulated in the EBA, not the award, which I'm guessing is Y.2. plus 25%. Sounds like the client is at fault, you should seek the outstanding wages from them.

[IndustrialResources]

Other than common law contractual issues you mention, however, in its simplest form:

An EBA can only cover an employer and its employees (s53 - FWAct). None of the EBA terms can been implied or cover third party workers of another employer (contracting labour hire employees).

The other issues is the overpayment in a casual loading cannot be used to set-off an underpayment in the base rate or ordinary rates of pay, but yet again if the pay rate (y2) is derived from the EBA, it’s not enforceable, but if it is from the modern award, then you will find it an issue.