Employment class actions: 2024 review

Government and healthcare sectors in the spotlight 3 min read

Employment class actions have been on the rise in recent years and are now an increasingly prevalent class action risk. In this Insight, we reflect on the past year of employment class actions.

Federal Court green light for employee class actions

In October 2023, the Full Federal Court gave the green light for employee claims to be brought as class actions, confirming that representative proceedings can be raised in relation to Fair Work Act (FWA) contraventions.¹ The court rejected an argument that the standing provisions of sections 539 and 540 in the FWA 'exhaustively prescribe' the manner in which proceedings in relation to workplace entitlements can be brought, finding that there was no irreconcilable inconsistency between those standing provisions and s33D of the Federal Court of Australia Act (FCAA).² We have since continued to see employee claims initiated as class actions.³

Healthcare sector in the spotlight

Four employment class actions have been filed in 2024: two in the government sector and two in the healthcare sector.⁴ Together with retail and hospitality, these are the key sectors exposed to employment class action risk (see our comments in the 2024 class action risk report).

Half of the new employment class action filings for 2024 relate to the alleged underpayment of doctors, following numerous predecessor doctor underpayment cases in Victoria,⁵ NSW⁶ and the ACT.⁷ These doctor underpayment claims comprise a large portion of the employment class actions currently on foot. We have also seen substantial settlements in the doctor underpayment cases, with a record $230 million settlement approval made in August in a class action relating to alleged underpayments on behalf of junior doctors across 65 NSW state hospitals and health services.⁸ The parties in a similar proceeding in the ACT have reached a settlement of $31.5 million, which is subject to court approval.⁹

Penalties an additional risk factor

Penalties are also a risk factor for businesses in the employment class actions space. Pursuant to s539 of the FWA, prescribed persons, including employees and employee organisations, may apply to the court for a penalty for contravention of a civil remedy provision. In October 2024, Justice Bromberg ordered Peninsula Health to pay a pecuniary penalty totalling $316,260 to the Australian Salaried Medical Officers' Federation in respect of multiple, 'irresponsible' contraventions of s50 of the FWA, which prohibits the contravention of a term of an enterprise agreement.¹⁰

Mischaracterisation claims may reemerge

The types of claims pursued in employment class actions have changed over time: from misclassification claims to claims based on underpayments and breach of employment terms. We expect there may be a renewed risk of misclassification-based filings following the new definition of 'casual employee' introduced by the Closing Loopholes Act (see our comments in the 2024 class action risk report).

The new definition came into effect on 26 August 2024. See: Recent developments in employment law and Closing Loopholes No.2 Bill passes both houses of Parliament for more information about the changes.

Courts continue to manage competing proceedings

Consistent with class action filings generally, competing proceedings are common in the employment class actions space. While we have seen competing proceedings brought by different plaintiff firms, there are also several instances of competing proceedings between a plaintiff firm and a union. Increasingly, we have seen courts make orders for the consolidation of competing employment class action proceedings.¹¹ You can read more about competing proceedings generally in our 2024 class action risk report.

Steps you can take now

Businesses, particularly those in the healthcare, government, retail and hospitality sectors, should proactively review their employment practices to ensure compliance with current laws and regulations.

In particular, employers should examine their compliance with payment obligations and the provision of employee entitlements, and should review their casual employment arrangements in light of the new definition of 'casual employee'.

Staying informed about recent legal developments and potential class action risks, as highlighted in our 2024 class action risk report will also be essential in navigating this increasingly complex landscape.