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Employment update: Bill to increase protections for vulnerable workers passed

Sep 12, 2017

On 5 September 2017, the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) was passed by Federal Parliament. The Bill addresses the exploitation of vulnerable workers by employers through significant changes to the Fair Work Act 2009 (Cth), including increasing the maximum penalty for ‘serious contraventions’ to $126,000 for individuals and $630,000 for corporations. It is expected that the changes will take effect shortly.

Who does this affect?

Businesses with employees generally will be affected by increases to the maximum penalties for breaching workplace laws. Among other things, the approved changes will make it much harder to defend against underpayment claims where a business has not kept proper records or issued payslips as required by law.

In addition to the above, franchisors and holding companies will be held responsible for breaches of workplace laws committed by their franchisees or subsidiaries.

What will change?

Increased penalties for ‘serious contraventions’

The Bill will introduce a new category of ‘serious contraventions’ in the Act, targeting unlawful workplace practices that are deliberate and part of a pattern of conduct. The maximum penalty for ‘serious contraventions’ will be increased to $126,000 for individuals and $630,000 for corporations (10 times more than the current limits).

Those who are accessories to a breach may also commit a ‘serious contravention’. This is particularly important since third parties (e.g. an employer’s accounting firm) can be found to have been accessories to an employer’s breach.

Reverse onus of proof

If an employer is accused of breaching a workplace law and has not kept proper records or given payslips as required, the employer will be assumed to be in breach of the law.

Increased powers for the regulator

The Bill will:

  • give the Fair Work Ombudsman (FWO) stronger information-gathering powers, including the power to force people to give information in certain circumstances;
  • make it unlawful to hinder or obstruct the FWO or an FWO inspector; and
  • create new penalties for giving false or misleading information.

Responsibility of franchisors and holding companies

The Bill will amend the Act to hold franchisors responsible for breaches of workplace laws committed by their franchisees, if they knew or should have known that the breach would happen. To avoid this, the franchisor must show that it took ‘reasonable steps’ to prevent the breach.

To determine if reasonable steps were taken, a Court will look at the franchisor’s level of control over its franchisee’s conduct, and what it did to make sure the franchisee was following workplace laws.

A similar duty will be imposed upon holding companies.

Cash-back arrangements to be made illegal

The Bill also makes it illegal to implement ‘cash-back‘ arrangements, such as those engaged in by 7-Eleven franchisees, where employees were required to return a portion of the wages paid to them.

What should you do to prepare?

While waiting for the changes to come into force, businesses should familiarise themselves with the new laws, as the potential consequences of not paying proper attention to workplace laws will be much greater.

Franchisors and holding companies should seek advice on what measures to take to educate their franchisors and subsidiary companies on their workplace obligations.

More information

If you would like to discuss any of the information contained in this newsletter, or require assistance with any employment-related matter, please contact a member of our Employment and Workplace Relations team on (03) 8600 8888.

Note: This update is a guide only and is not intended to constitute legal advice.