While the majority of Australian employment lawyers are gleefully debating the Israel Folau matter against Rugby Australia, the class action alleging underpayment of wages by Domino’s Pizza Enterprises Limited snuck into the Federal Court of Australia last week with limited attention to it paid by legal commentators. It is Phi Finney McDonald leading the charge, with the support of Therium Litigation Finance.

Are we surprised that class action funders have ventured out of the areas of commercial disputes and into the employment law sphere? Or was this just an inevitable, natural movement into this area of law?

Many would argue the latter.

Class actions have held a prominent place in the United States. However, in recent years, there has been a explosion of high profile corporate class actions in Australia, such as those shareholder class actions against a number of the banks (thanks to the recent Royal Commission), and consumer class actions because of defective products (such as the actions regarding Sigma Pharmaceuticals, Essure and Ford Australia).

In Australia, class actions against “Big Business” has become “big business”, and its now time to test the viability of class actions against employers for breaches of legislation in the often complex area of employment.

There is a real potential for employers to face class actions in relation to:

  • miscategorisation of “gig economy workers”;
  • miscategorisation of casual employees;
  • sham contracting in general; or
  • (as is the case with Domino’s) the alleged underpayment of wages because of incorrect application of competing industrial instruments.

While the complexities of these actions are hard to grasp (even amongst the best of us employment lawyers), it raises the real question of whether these kinds of actions will take the place of actions that would usually be run by industrial organisations such as unions. Will this change the landscape of union involvement and relevancy? Will unions need to step aside and make way for collective actions supported by litigation funders as opposed to being funded by the fees of union members? Or, will unions drive these claims and be the ones to seek out the engagement of litigation funders?

Time will tell.

What is known, however, is that the party who commence the employment- related class action still needs to meet the various rules that allow them to do so. In particular, they need to show that the representative action is representative of the class of claimants, and the action needs to be deemed ‘in the interests of justice’, whether it be for considerations of cost, efficiency or appropriateness.

In response to the filing of the proceedings, Domino’s has told investors that it plans to defend against these proceedings, but have provided little information on how it intends to do so.

Regardless of how Domino’s handles this class action, the commencement of it by Phi Finney McDonald should be taken as a “shot across the bow” at all organisations when it comes to how prospective legal matters may be handled in future.