As of September 5, 2017, the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 passed both Houses of Parliament. The Bill won’t become law until it receives Royal Assent.

The major change is the increase in penalties for breaches of the Fair Work Act by 10 times the current amount.

What are the changes?

When the Bill receives Royal Assent, the following changes to the Fair Work Act 2009 (the Fair Work Act) will apply straight away:
• increased penalties for ‘serious contraventions’ of workplace laws
• making it clear that employers can’t ask for ‘cashback’ from employees or prospective employees
• increased penalties for breaches of record-keeping and pay slip obligations
• employers who don’t meet record keeping or pay slip obligations and can’t show a reasonable excuse will need to disprove wage claims made in a court (this is also referred to as a reverse onus of proof)
• stronger powers for us to collect evidence in investigations
• new penalties for giving us false or misleading information, or hindering or obstructing our investigations.

The following changes will also apply six weeks after Royal Assent:
• certain franchisors and holding companies could be held responsible if their franchisees or subsidiaries don’t follow workplace laws (if they knew, or should have known, and could have prevented it).

The changes to the Fair Work Act are designed to hit so-called “dodgy bosses” harder, with tougher penalties and adding new powers for the Fair Work Ombudsman.

The Fair Work Amendment (Protecting Vulnerable Workers) Bill was introduced into the House of Representatives in March this year, with Employment Minister Cash pledging at the time to weed out employers that fail to comply with minimum payment standards, or turn a blind eye to lack of compliance in their franchise networks.

There are increased levels of liability for franchise owners, and operators could face under the new rules.

The government’s main aim is to protect vulnerable workers after several high profile cases are an area of focus after high-profile cases of employees being underpaid, including as part of the 7-Eleven scandal that was exposed in 2015.

The legislation amends the Fair Work Act and gives the Fair Work Ombudsman new investigative powers and $20 million in additional funding.

The legislation makes changes to the following elements of workplace law by:
• Making so-called “cash-bank” arrangements explicitly illegal, prohibiting an employer from delivering a wage to a worker and then asking for part of this to be repaid;
• Placing a focus on higher penalties for a category of non-compliance known as “serious contraventions” of workplace law;
• Introducing new provisions that mean holding companies and franchise entities can be held responsible for non-compliance from franchisees if it is found the holding company should have reasonably known about the breaches;
• Extending the powers of the Fair Work Ombudsman to gather evidence; and
• Changing the way companies are held responsible when there are record-keeping contraventions.

Penalties

The legislation increases the maximum civil penalties where a failure to abide by workplace laws amounts to a “serious contravention”. This is defined as situations where an employer is found to be engaged in a systematic and deliberate pattern of behaviour that undermines the Fair Work Act.

The scale of penalties means individuals and businesses can be fined up to ten times higher for breaches than previously, up to $126,000 for individuals and $630,000 for a corporation.

Liability of franchise operators and holding companies

The legislation extends the Fair Work Act to make a franchise entity or holding company also liable for things like underpayments if it is found they “knew or could reasonably be expected to have known” that a contravention of a workplace law had occurred or was likely to occur.

The Fair Work Ombudsman’s new powers

The Ombudsman had been promised new powers to investigate potential breaches and gather evidence, but an amendment to the legislation places some limits on when the Ombudsman can use these powers, placing the focus on underpayments cases and cases involving vulnerable workers.

Record keeping

An amendment to sections of the legislation that relate to record keeping will change what employers have to do in the event they are alleged to have underpaid employees by the Ombudsman. This change deals with what happens in cases where a claim has been made about a potential breach to workplace law, but the employer has not kept detailed records that would prove they have acted in accordance with the law.

If an employer does not keep or provide correct payslips or accurate employee records, and an employee makes an underpayment claim, the onus is on the employer to prove they have paid the employee correctly. It will not be for the employee to prove they have been paid incorrectly.

It reverses the onus of proof so employers must prove they have kept the records and paid correctly. If the records are not kept then the increased fines will add high penalties to the claim for underpayment.

Conclusion

Employers must make every effort to ensure that the record keeping is up to date and in line with legislation. The relevant award must be applied strictly and complied with. It seems that gone are the days of small penalties and a ‘slap on the wrist’ approach.