Requirements to spend or pay back money

In limited situations, an employer can require an employee to spend or pay back money.

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Requirement to spend or pay back money

An employer can’t make an employee spend their own money, or pay the employer (or someone else) money, if:

  • it’s unreasonable
  • for a payment, the payment is for the employer’s benefit (or the benefit of someone related to them).

The above also applies to a future employee (in connection with their employment or possible employment).

These rules apply to any of the employee’s (or future employee’s) money, not just the pay they get for working.

This means that an employer can’t:

  • ask a potential employee to pay money just to receive a job offer
  • ask employees to pay money to keep their job
  • pay the employee the correct pay rate and then make them give some of it back
  • apply unfair pressure to employees to spend their pay or own money.

Example: Potential employee making ‘upfront’ payments 

Helen is a civil engineer who is looking for an employer who will sponsor her on a visa.

A potential employer, Albert, says he will only employ Helen if she makes an upfront payment of $5,000. Albert tells her that the payment will cover the cost of her sponsorship and compulsory company training.

Helen pays the $5,000 as she needs the job and the sponsorship. When she tries to contact Albert about starting employment, she can’t reach him.

Regardless of whether she is employed or not, requiring Helen to pay money in return for a job offer is likely to be unreasonable. This means it would be unlawful.

Requirement to spend or pay back money – terms that have no effect

Even if an award, registered agreement or employment contract has a term that requires an employee to spend or pay their money, that term will have no effect if:

  • the requirement is unreasonable in the circumstances
  • for a payment, the payment is directly or indirectly for the employer’s benefit (or someone related to them).

Terms will also have no effect if they require an employee who is under 18 to make a payment to an employer or someone else, unless the payment is agreed to in writing by the employee’s parent or guardian.

Cashback schemes

Making an employee pay back some of their wages is often referred to as a ‘cashback scheme’.

A cashback scheme is:

  • an unlawful requirement for an employee to spend or pay money
  • where the money spent or paid by an employee will be treated like an unlawful deduction.

In these circumstances, the employee is entitled to back pay from their employer. The back pay is equal to the amount spent or paid by the employee.

A court may also be able to award penalties (and interest on the back pay amount). Amounts paid by potential employees can also be recovered, whether they’ve started work with the employer or not.

Example: Cashback schemes

James works as a shop assistant.

His employer, Danielle, pays him the full award pay rate under the Retail Award but has told him that he has to give some of his pay back to her each week in cash because other employees work for a lower rate.

Danielle tells James if he doesn’t, he’ll stop getting shifts. James is on a student visa and needs the work.

This is a cashback scheme and isn’t allowed. Danielle is unreasonably making James give her money that is for her benefit.

Source reference: Fair Work Act 2009 s.324-327

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