VIC how to calculate interest for a late payment in years

[johnnyyue001]

first time here.

I worked as a normal permanent staff for my employer, started from 2015. last month I just realised there is a clause in my contract that my employer must pay me up to <high income threshold> but they haven't, so I am now checking with legal advice on can I claim company breach of contract.

if eventually my guess is correct and company needs pay me back the missing part, I believe I can ask for interest right? what interest rate I shall use? form google I see something like "Penalty interest rate" which is 10% currently.

thanks

 

[Rod]

Use 10%. If you want to get fancy with your calculation using 10% compounding based on your pay period.

Keep in mind that 'up to the high income threshold' means 'no more than and can be less than'.

Let me know if you want a second opinion

 

[johnnyyue001]

Use 10%. If you want to get fancy with your calculation using 10% compounding based on your pay period.

Keep in mind that 'up to the high income threshold' means 'no more than and can be less than'.

Let me know if you want a second opinion

thanks Rod, yes sorry for the incomplete information, the clause in my contract says in return of no application to any modern award, company will make me high income employee and guarantee to pay me exceed the threshold.

sorry again for the typo.

 

[Scruff]

I believe that the best chance of getting interest is to calculate it in the same way that the applicable court would.

(@Rod or any other professionals - Please correct me if the following information is incorrect.)

It is my understanding, that the applicable rates are pretty much the same across the various courts and jurisdictions, being

Pre-judjment rate = RBA Rate + 2%, and
Post-judjment rate = RBA Rate + 4%.
The rates are updated every six months based on the last rate published by the RBA prior to 1 January and 1 July each year and each court usually maintains a full historical rate table on their website.​

For historical claims such as this, you should calculate the interest for for each six month block based on the applicable historical pre-judjment rate for that period.

Additionally, I'm pretty sure that courts advise that simple interest should be used, not compound interest. As I understand it, courts don't charge "interest on interest" (compound), they only apply simple interest.

If you:

1. calculate interest according to how the applicable court would calculate it, and
2. you explain exactly how you've calculated the interest, and
3. you provide a reference to the applicable interest rate table that you used,​

then you greatly increase the chance that the other party will concede and pay the interest exactly as you have calculated it. If you use any other method, such as compound interest which would greatly increase the amount payable, then you risk other party refusing to pay interest at all. If the matter then proceeds to court, then it will be up to the court to decide if interest is even payable in the first place, and if so, the court will most likely calculate the interest according to their normal procedures as described above anyway.

It's best not to appear greedy to the other party. In your circumstances, you have a valid case for claiming interest, but if you over do it, you would likely have to fight for it and I believe you would be somewhat disappointd with the result.

From personal experience, I can tell you that I followed this approach recently in a matter with an energy retailer. The matter involved breaches of the ACL, so I calculated the interest using the rates applicable to the Federal Court. The company paid all amounts owing plus the all interest without any questions.

 

[Rod]

See HUNGERFORDS v. WALKER (1989) 171 CLR 125 for a good discussion on interest.

re: applicable rate. We don't know what cause of action will be pleaded, common law breach of contract, or equitable unjust enrichment, or something under the FWA or yet some other cause action not disclosed. We don't know which court or the remedies being sought, or whether the FWC will be involved.

Victoria, which is where the OP is located, has the Penalty Interest Rate Act 1983. The current rate is 10%.

 

[Scruff]

@Rod: Thanks mate. I'm in NSW, so was unaware that VIC has legislation specific to interest and a 10% rate. Do you know off hand if that Act stipulates simple or compound? I think knowing this would be helpful to the OP.

 

[Rod]

I couldn't find any reference to simple or compound.

The type of claim will determine which method should be used.

 

[johnnyyue001]

@Rod: Thanks mate. I'm in NSW, so was unaware that VIC has legislation specific to interest and a 10% rate. Do you know off hand if that Act stipulates simple or compound? I think knowing this would be helpful to the OP.

hi Scruff, @Rod, thanks for the inputs. to share more complete context, I paste the employment contract clause here:

Screen Shot 2018-12-08 at 1.56.19 pm.png

at the beginning my doubt is does Company have the obligation to pay higher than threshold, or they only "best effort" or have the choice to pay me higher then remove my modern award, OR pay me lower than grant me modern award, due to the wording "intended" and "accordingly"

then I consulted 2 local legal advices and they think company shall pay higher, in other words I am underpaid. I am now checking my HR, has been 2 weeks but seems they still can't response, maybe discussing internally

 

[Rod]

I'd give them 30 days in total.

I agree re: screenshot of one clause.

 

[johnnyyue001]

hi

I'd give them 30 days in total.

I agree re: screenshot of one clause.

hi Rod, what does it mean by "I agree re: screenshot of one clause."?
thanks