16 May GOVERNMENT CRACKDOWN ON EMPLOYERS EXPLOITING VULNERABLE WORKERS

Last Thursday, the third reading of the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (“the Bill”) was agreed to by the House of Representatives. The Bill was introduced to address growing concerns in the community about the exploitation of vulnerable workers and respond to reports which evidence that our workplace laws need to be strengthened.

The Bill amends the Fair Work Act 2009 (the “FW Act”) to implement the Government’s “commitment to protect vulnerable workers” by:

1.  Increasing penalties for “serious contraventions” of the FW Act involving “deliberate conduct”. The maximum civil penalty for such a contravention is now 600 penalty units* or $108,000 for an individual and 3,000 penalty units or $540,000 for bodies corporate (which is five times higher than the previous maximum penalty);

2.  Stopping employers from unreasonably requiring their employees to make payments, for example, asking that they pay a portion of their wages back in cash;

3.  Strengthening the evidence-gathering powers of the Fair Work Ombudsman to investigate cases of exploitation similar to those available to the Australian Securities and Investment Commission and the Australian Competition and Consumer Commission;

4.  Making franchisors and holding companies (who have a significant amount of influence or control over their business networks) liable for underpayments of staff by their franchisees or subsidiaries where they “knew or ought reasonably to have known” of the contraventions and failed to take reasonable steps to stop them; and

5.  Introducing higher penalties for record keeping failures. For example:

(a)  the maximum penalty for “strict liability” contraventions relating to employee records and pay slips in sections 535 and 536 of the FW Act increases from 30 to 60 penalty units for an individual and 150 to 300 for bodies corporate. This translates to $10,800 for an individual and $54,000 for a corporation; and

(b) the maximum penalty for knowingly making/giving false or misleading employee records or pay slips under 3.44 of the Fair Work Regulations increases from 20 to 60 penalty units for an individual and 100 to 300 penalty units for bodies corporate. This converts to $10,800 for an individual and $54,000 for a corporation.

The implementation of the above stricter laws and increases to maximum penalty rates are hoped to deter unlawful practices in the workplace. They also act as a reminder for employers to be aware of their employment practices and ensure that they are complying with their legal obligations at all times or face large penalties.

HR Law will keep you up to date on the progress of the Bill and when these changes will come into effect.

*A penalty unit means the amount of $180 as per s4AA of the Crimes Act 1914.