Vulnerable workers laws

Posted: August 23, 2018 at 11:12 pm

Article prepared for POAAL and its members by Workforce Guardian. Paid-up POAAL members can access over-the-phone employment relations advice from Workforce Guardian.

Over the last couple of years a number of highly visible retail brand names, including particularly well-known franchises, came under very public scrutiny for a range of breaches relating to underpayment of wages and employee record keeping. Some breaches appear deliberate and systematic, while others were careless. Nonetheless it was considered a significant enough issue in the economy so as to result in last year’s Protecting Vulnerable Workers Bill which brought about amendment to the Fair Work Act 2009 (the “Act”).

Those amendments brought about significant increases in possible penalties for employers for ‘serious contraventions’ of specific parts of the Act, and failures by employers to maintain proper records. A serious contravention is conduct by an individual or company that is deliberate or intentional and forms part of a systematic pattern of conduct.

A civil remedy provision under the Act includes a breach of the National Employment Standards or a modern Award. Individuals who engage in serious contraventions of specified civil remedy provisions face a maximum penalty of $126,000. Companies could face a maximum penalty of $630,000. That is a tenfold increase in the penalty currently under the Act. The Government’s rationale behind the increases to penalties and other requirements is to deter the exploitation of workers and poor employment practices.

The provisions also give the Fair Work Ombudsman greater investigative and enforcement powers. The FWO will be able to issue a notice to individuals and companies requiring information or documents as well as requiring an individual to participate in an interview under oath or affirmation. There is also a prohibition for deliberately providing false and or misleading information. Further, hindering or obstructing the FWO in exercising their powers has an increased penalty.

Under the legislative provisions, franchisors, and their holding companies, will contravene the Act if their franchisees contravene the Act and the franchisor:

  • is ‘responsible’ if it exerts a ‘significant degree of influence or control’ over the affairs of the franchisee; and
  • either ‘knew or could reasonably be expected to have known’ that the relevant contravention was, or was likely to be, committed by the franchisee. This results in possible accessorial liability.

Franchisors or holding companies will not contravene the Act if they have taken reasonable steps to prevent the relevant contravention by the franchisee. Reasonable steps might include:

  • training franchisees;
  • requiring franchisees to comply with the Act and auditing them;
  • encouraging cooperation with the FWO; and
  • establishing a whistle-blower hotline for employees to report non-compliance.

Franchisors may seek to recover from their franchisees any payments that they make to employees by virtue of their liability as a ‘responsible’ franchisor under the new provisions.

If an application, such as an underpayment of wages claim, is brought against an employer and the employer was required by the Act to keep records or payslips in relation to that matter but did not do so, the burden of proof of the allegation will reverse. It will be up to the employer to prove that they are not liable for the claim, or the full value of the compensation and/or penalties will be payable.

Action list

Licensees need to ensure:

  • Their employees are being paid at least the minimum hourly rates of pay under the relevant Award for the work they are performing.
  • They are meeting pay slip and record-keeping obligations. Businesses that don’t keep the right records, don’t give proper pay slips, or who make false or misleading records can face higher penalties.
  • They are making superannuation contributions for their employees as required by law.
  • They comply with their LPO Agreement with Australia Post.

Essentially, if you are paying your employees appropriately and can prove it by way of good record keeping you should have no problems. If you have any queries or doubts, seek advice. We always prefer to receive a question early rather than have to give clients bad news later.

Charles Watson
GM, Human Resources
Workforce Guardian


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