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Are law graduates at risk of being underpaid?

Are law graduates at risk of being underpaid?

By Loretta Houlahan


Law is often viewed as a prestigious profession but for some graduates the situation can be bleak.

With few graduate jobs around, gaining employment in a firm is not the golden ticket it used to be. Graduate salaries have stagnated and working hours typically extend well beyond 9-5. Further, as recent news reports have highlighted, it’s not just 7-Eleven workers who are at risk of being underpaid. Law students and graduates can also find themselves being seriously ripped off.

The recent Federal Circuit Court of Australia decision of Finberg v Efron [2015] FCCA 2470 is one example of a budding young lawyer being underpaid by his employer. In this case, the law student, who was working part time with a solicitor at his Melbourne based firm, was initially paid $9 an hour until he was given a pay increase to $10 an hour.

In his Federal Court application, the law student alleged his employer had breached the Fair Work Act 2009 (Cth) and the Legal Services Award 2010 and was owed $28,882.83. Justice Suzanne Jones ruled in the applicant’s favour, finding that the correct minimum wage for the law student’s role was $22.31 per hour. As such, he had also been underpaid superannuation and had not been paid the correct amount for annual leave.

However, even before this decision, cracks in the graduate employment market were beginning to show. Last year, a South Australian law firm advertised for a graduate “employment” program whereby the employee had to pay the employer $22,000 to work and gain experience there. Although the firm classified the arrangement as one of employment, it should be distinguished from the traditional employment arrangement whereby the employer pays the employee, even if they are just a graduate.

Advertisements on Seek would indicate even more issues with graduate salaries. For example, at the time of writing one Sydney law firm was advertising an entry level position for $30,000 per annum; a wage that falls below even the national minimum wage order of $34,158 per annum for full time employees. The advertisement specifically targeted budding lawyers by stating “law graduates and students are encouraged to apply”.

So what can young lawyers and graduates do if they find themselves being underpaid?

The situation is not all doom and gloom. Young lawyers and students should be aware that they have employment rights, and enforcing them might be easier than they think. As we’ve seen recently with the 7-Eleven half-pay scandal, breaching minimum wage conditions is taken seriously by the Fair Work Ombudsman and the courts, and employers who underpay their workers may be prosecuted.

Although lawyers are not covered by a modern award, law graduates, law clerks and administrative employees are. The appropriate award for employees in the legal profession is usually the Legal Services Award 2010 which sets out the minimum wage and conditions for those working under it. Although the minimum wage differs depending on the work that is being performed, it will always be higher than the $10 an hour which appeared to be the going rate at Efron & Associates.

And while fears about job loss or not getting a reference for enforcing one’s legal entitlements at work are valid concerns, it is important to bear in mind that under the Fair Work Act 2009 (Cth), employees have six years from the date of each underpayment to claw back underpayments from their employer. This means that after an underpaid graduate moves on to bigger and better things, they may still have time to file an application in the Federal Court of Australia or other eligible court to reclaim those missing wages.

It is also important to note that award/enterprise agreements cover employees and non award/enterprise agreement employees earning less than $136,700 are also protected from unfair dismissal if they have met the eligibility requirements including the minimum employment period of six or 12 months depending on the size of the employer. All employees including prospective employees are protected against unlawful adverse action. So if a graduate is given the boot for speaking out, he or she may also be able to make an application in the Fair Work Commission.

Alternatively, an employee can simply lodge a complaint with the Fair Work Ombudsman who may investigate underpayments on their behalf. If the employer refuses to comply, the Ombudsman may prosecute them. Further, Job Watch Employment Rights Legal Centre operates a free phone help service during business hours; and employees of solicitors who underpay may also wish to lodge a complaint with the Legal Services Board and Commissioner.

If you need help understanding your employment rights at work, contact the Fair Work Ombudsman or Job Watch

Loretta Houlahan, Lawyer, Parke Lawyers

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