The Turnbull Government has recently introduced the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Bill) into Parliament following widespread media coverage of exploitation of vulnerable workers.
The Bill seeks to:
- increase penalties for ‘serious contraventions’ of certain provisions of the Fair Work Act 2009 (Act);
- hold franchisors/holding companies responsible for certain contraventions of the Act committed by their franchisees/subsidiaries; and
- increase the powers of the Fair Work Ombudsman.
Increased Penalties
If the Bill becomes law, maximum penalties for “serious contraventions” of the Act will increase tenfold to 600 penalty units ($108,000) for individuals and 3,000 penalty units ($540,000) for companies. The increased penalties apply to civil remedy provisions of the Act, which include breaches of:
- a workplace instrument (like a Modern Award or Enterprise Agreement),
- the National Employment Standards (NES)
- employer obligations to keep records and issue payslips; and
- certain wages provisions, including those that prescribe the method and frequency of wage payments or unreasonable deductions from wages.
A serious contravention is one that is “deliberate” and “part of a systematic pattern of conduct relating to one or more persons”. Further, the Bill will double the maximum penalties for any contraventions of payslip and record keeping obligations, regardless of whether the contraventions are serious. The new penalties will increase to 60 penalty units ($10,800) for individuals and 300 penalty units ($54,000) for companies.
Liability of Franchisors and Holding Companies
Under the Bill, franchisors and holding companies may be held liable for contraventions of the Act committed by their franchisees and subsidiaries. The test for this extension of liability is whether the franchisee or holding company (including an officer of the company):
- knew, or could reasonably be expected to have known of the contraventions; and
- could reasonably have taken action to prevent such contraventions from occurring.
The Minister, Michaela Cash, gave examples of what steps might be taken to avoid liability, including:
- ensuring that the franchise agreement or other business arrangements require franchisees to comply with workplace laws;
- providing franchisees or subsidiaries with a copy of the FWO’s free Fair Work Handbook;
- encouraging franchisees or subsidiaries to cooperate with any audits by the FWO;
- establishing a contact or phone number for employees to report any potential underpayment to the business;
- auditing of companies in the network.
Powers of the Ombudsman
The Bill will increase the power of the Fair Work Ombudsman in line with those of other regulators like ASIC and ACCC. Included in these new powers. is the Ombudsman’s ability to compel individuals to attend interviews and answer questions, even if such answers may incriminate the individual.
Lessons for Employers
Employers should take steps to ensure that their business and subsidiaries are complying before the Bill becomes Law. It is important to note that most prosecutions in this sphere involve contraventions of multiple provisions of the Act and penalties may be imposed for each contravention. The penalties sometimes reach hundreds of thousands of dollars. Under the new Bill, those penalties could be in the millions. We can provide advice on whether your business is in compliance with the Act and help to implement safeguards against your business being penalised or, if you are a franchisor or holding company, held liable for the actions of your franchisees/subsidiaries.
This article is intended to be for information and educational purposes only and cannot be relied upon as legal advice. The information may not apply to your circumstances or to your particular situation. If you need specific advice or you have any questions, we welcome you to contact us directly.
