Putting class disputes to work: The class action as a wage law enforcement tool for today, and class arbitration as an enforcement tool for tomorrow

Abstract

Enforcing wage laws occurs in a dynamic regulatory space with multiple actors. Traditional actors in this space, the Fair Work Ombudsman and unions, achieve much, but are prevented by finite resources and limited legal levers from recovering wages for all who are underpaid. This creates an enforcement gap, on which this thesis centres. This thesis applies ‘smart regulation’ principles to recognise employees as non-state actors in their own right, capable of private enforcement action to recover wages for themselves. It argues when employees do so collectively, their Class Enforcement Preference is to recover wages quickly and in full. Focusing on the class action in the Federal Court as an enforcement tool, this thesis examines the extent to which class action outcomes align with the Enforcement Preference. This thesis draws on common law and literature on the statutes and rationale underpinning the regulation of class action and employment litigation. Quantitative data on all ongoing employment class actions at a point in time also informs analysis on litigation duration. Findings reveal class action outcomes do not align with the Enforcement Preference. Class action duration frequently lasts years, resisting ‘quick’ as an objective description and contrary to the prompt resolution of other disputes in the courts and Fair Work Commission. Wage recovery in full is also uncommon, with the economic burden of litigation often compounded by the involvement of lawyers and third-party litigation funders. In response, this thesis argues wage law enforcement by employees could be strengthened with a new class-based tool relying on arbitration over litigation, and situates that tool within the enforcement framework. With arbitration underpinned by parties’ consent, this thesis provides recommendations for regulatory reform to incentivise employers and employees to offer their consent, with a focus on how to make enforcement decisions easy, attractive, social and timely.