Increase to jurisdictional limit for small claims proceedings under the Fair Work Act

Author: Zeinab Farhat & Megan Adams, Progressive Legal 

On 1 July 2023, the jurisdictional limit for small claims proceedings under the Fair Work Act 2009 (Cth) (“FW Act”) increased from $20,000 to $100,000. These amendments were part of a considerable list of changes made to improve the compliance of employers with the FW Act.  

The recent amendments have broadened the scope of who can utilise these small claims procedures.  

This short article will consider what has been changed and what the benefits are of small claims proceedings.

What has been changed? 

Under the FW Act, employees can take legal action in a small claims court pertaining to underpayment claims against their employer. Previously, this was capped at underpayments of $20,000. 

Pursuant to the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, section 548(2)(a) of the FW Act was amended to replace $20,000 with $100,000. As such, section 548(2)(a) now provides that: 

In small claims proceedings, the court may not award more than $100,000; or if a higher amount is prescribed by the regulations–that higher amount.

What consequences do these changes have?

Section 548(2)(a) increases the cap on the amount that can be awarded to an applicant. This increase to the jurisdictional limit means that small claims procedures are now available to a larger number of workers who are seeking to recover unpaid work entitlements. 

It is important to note that the underpayment must have occurred within 6 years from the time the entitlement was meant to be made.   

What are the benefits of small claims proceedings?

Small claims hearings are meant to be informal. Section 548(3) provides that the Court is not bound by the rules of evidence and procedure and may act informally without regard to legal forms and technicalities.

Further to this, a party to a small claims proceeding can only be represented by a lawyer with leave of the court (s 548(5)). To this end, these proceedings are expected to be easier and not mimic the traditional litigation process. Because the process can be done without legal representation, it is more affordable, and employees are more likely to be self-represented.  

Regardless of the informality associated with these proceedings, the presiding Judge or Registrar can make a legally binding decision (known as a Court order) based on the evidence presented. 

Given the significant increase in the threshold for small claims and the 6-year time limit to initiate proceedings, employers should be aware that more small claims may be filed in the coming months, and those claims will be larger amounts than employers have previously seen. 

Employees who succeed in these small claims proceedings can apply to claim back the filing fees from their employer as well.  

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