The government has stepped in to protect workers following months of controversial headlines uncovering poor record keeping, questionable workplace practices and exploitation, underpayments, deception, and superannuation guarantee fraud by employers.

The Protecting Vulnerable Workers Bill amends the Fair Work Act to:

1. Increase penalties for serious contraventions of workplace laws

A serious contravention of workplace laws occur if someone knowingly contravenes the law and their conduct is part of a systematic pattern. The penalties for breaches vary according to the offence. It has increased up to 10 times higher than cases without the aggravating features. A breach is more likely to be a serious contravention if:

  • there are concurrent contraventions of the Fair Work Act occurring at the same time (e.g. breaches of multiple award terms and record-keeping failures);
  • the contraventions have occurred over a prolonged period of time (e.g. over multiple pay periods) or after complaints were first raised;
  • multiple employees are affected (e.g. all or most employees doing the same kind of work at the workplace, or a group of vulnerable employees at the workplace)’ and
  • accurate employee records have not been kept;
  • pay slips have not been issued, making alleged underpayments difficult to establish.

2. Prevent record keeping failures

Comprising a huge part in the laws are appropriate record keeping. This is to prevent employers from reasoning poor management practices as a defence to slow response or inaction.

The penalties for poor record keeping have increased dramatically- now up to $12,600 for a standard breach, $126,000 for serious contraventions by individuals, and $630,000 for corporations. Maximum penalties are likely to apply when the employer knows that the records or pay slips are falsified.

3. Hold franchisor entities and holding companies liable

Law provisions hold franchisors and holding companies responsible for certain contraventions of the Fair Work Act by businesses in their networks. The Government’s concern is that, some franchisors may have been blind to the problem of underpayments to workers, furthermore, there may also be a lack of action on their part.

The provisions only apply to responsible franchisors that have a significant degree of influence over the relevant franchisee’s affairs. Franchisors and holding companies are responsible if they have an idea the contraventions would probably occur. Or even more if they know contraventions of a similar character are likely to occur yet no preventive actions were taken. In contrast, when franchisors or officers recognize a problem and take action quickly to resolve it, they become safe from liability.

Companies need to have appropriate systems and monitoring in place to ensure that franchisees are acting within the law.

4. Ban “cashback” from employees or prospective employees

Asking employees for “cashbacks” so they can keep their jobs is certainly unreasonable. It is noteworthy that the law clearly prohibits that. Penalties have increased tenfold for cases where these aggravated circumstances apply.

5. Power and penalties of the Fair Work Ombudsman ramped up

The Fair Work Ombudsman (FWO) now has enforceable power of questioning as part of their information gathering, therefore, they now have similar powers with the ASIC and the Australian Competition and Consumer Commission. Hence, the FWO can already start issuing “FWO notices”. These require someone to give information, produce documents, or attend before the FWO to answer questions. The maximum penalty for failing to comply with an FWO notice is $126,000 for individuals and $630,000 for corporations.

New penalties apply for giving false or misleading information, or hindering or obstructing a Fair Work investigation.

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