Employee Requirement to Spend or Repay Money

When an employer expects employees to pay for things out of their own pocket, this can cause alarm bells to sound. The expectation is usually that an employer will provide everything that an employee needs to perform their work. There are, however, some instances when an employer can legally ask an employee to pay for things themselves. Under Australian workplace law, an employer can expect an employee to spend or repay their own money when it is reasonable and not to the employer’s benefit. This article looks at the circumstances when an employer can require an employee to spend or repay money.

Employee v contractor

One of the most significant distinctions between an employee and a contractor is the requirement to spend or pay money. Contractors bear their own risk, including the out-of-pocket payment of expenses, while employers bear the risk for employees and cover their costs. Certainly, an employer will have insurance that covers their employees and the business generally. In addition, employees are typically provided with the training, resources and tools they need to undertake their work. Some employment contracts have a ‘claw back’ clause that covers training costs, so that if an employee leaves at a certain point, they have to pay back these costs. For example, an employee may be required to repay a portion of a $3,000 training course if they leave in the first four months. This type of clause is particularly common in the hairdressing and beauty industry. These clauses are generally seen as legally binding as long as they are reasonable.

Prohibition against unreasonable demands on employee

Under section 325 of the Fair Work Act 2009, an employer is prohibited from requiring their employee to spend their own money, deduct from their pay, or pay the funds directly to the employer (or their agent), if:

• it is unreasonable
• or the payment benefits the employer or someone related to them.

This legal prohibition applies to current and prospective employees if it relates to their employment or potential employment. As such, an employer cannot:

• ask a prospective worker for money in exchange for a job offer
• ask a current employee for money to keep their position
• pay the correct salary and require the worker to pay some back, or
• place unfair pressure on workers to spend their salary or own money.

The worker’s employment contract, enterprise agreement or modern award may include a requirement for them to spend money. However, just because it is written in a legal document does not mean that this contractual obligation is enforceable in court. Such a provision will only be enforceable if it is reasonable and not for the benefit of the employer. Employers should draw up such documents carefully with the help of an employment lawyer to ensure that any such clause is legal and appropriate.

Work uniforms

A common question that comes up in relation to this issue relates to whether an employee can be asked to pay for their own work uniform. Under current Australian employment law, an employer can require an employee to pay for the expense of a uniform, but not to an excessive or unreasonable level. What is reasonable in this instance is assessed on a case-by-case basis, with the only regulatory guideline being that a cost is reasonable if it is the same, or no less favourable, than is offered to the general public. An employer with a dress code that is not protective or special would expect their employees to purchase appropriate clothing themselves.

However, this general rule about uniforms does not apply across all industries and awards. For instance, the General Retail Industry Award (GRIA) states that employees covered by this award cannot be forced to bear the cost of uniforms. If a GRIA covered retail clothing store requires its employees to wear either a company branded uniform, or wear clothing currently sold in store, the onus is on the employer to pay or reimburse the employee for the cost of this clothing. Offering employees a staff discount to purchase these items of clothing is insufficient and a potential breach of the award. The employer may also be responsible for laundry costs.

Deviation from employer’s directions

There are other instances where an employee may be required to pay out of pocket for an expense, such as if a worker deviates from their employer’s directions to the employer’s financial detriment. In such cases, the employer may be able to claim the cost of the detriment back from the employee. An example of this would be if a worker uses a company vehicle for authorised purposes and has an accident, the employer is legally liable for the costs. On the other hand, if the worker takes the vehicle without permission and uses it for their own purposes, and there is an accident, then the employer is entitled to recover the associated costs from the worker due to their negligence.

An employee should never have to cover certain expenses, otherwise the employer opens themselves up to a Fair Work complaint. At Go To Court Lawyers, we have experienced employment law solicitors who can further explain the legal implications of this matter. Please reach out to our team on 1300 636 846.