All employers, not just franchisors, face significant new responsibility, a more robust watchdog and stiff new penalties after the Parliament voted to pass the long anticipated Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017.

The new legislation follows a commitment by both sides of politics to do more to protect vulnerable workers, and comes in the wake of revelations of systematic exploitation and wage fraud involving some of Australia’s biggest businesses.

While high-profile cases such as 7-Eleven are credited with bringing about the changes, it is worth noting that the new laws are not solely restricted to the franchise sector. Any employer who is found to have committed “serious contraventions” of payment-related workplace laws now faces much harsher penalties with the Fair work Ombudsman also being granted sweeping new investigative powers.

What the Protecting Vulnerable Workers Bill means for you:

The legislation aims to protect vulnerable workers by:

• introducing a new higher scale of penalties for “serious contraventions” of the Fair Work Act with a tenfold increase in the maximum penalty, up to $630,000 for a corporation and $126,000 for an individual;
• trebling the maximum penalties for contraventions relating to employee records and payslips;
• giving the Fair Work Ombudsman substantially greater investigation and enforcement powers, including the power to seek a FWO Notice requiring a person to give information, produce documents or to attend before the Fair Work Ombudsman and answer questions;
• introducing new penalties for providing Fair Work inspectors with false or misleading information or records and new prohibitions for hindering or obstructing the Fair Work Ombudsman or an inspector in the performance of their functions;
• making franchisors and holding companies responsible for underpayments by their franchisees or subsidiaries where they knew or ought to have reasonably known of the contraventions and failed to take reasonable steps to prevent them;
• making officers of a franchisor or holding company potentially liable as an accessory to a contravention of the new provisions by a franchisor or a holding company;
• expressly prohibiting employers from unreasonably requiring their employees to make payments back to the business (e.g. demanding a proportion of their wages be paid back in cash); and
• imposing the burden on the employer to disprove an allegation made by an employee in relation to contraventions of certain civil remedy provisions where the employer was required to make and keep a record, make a record available for inspection or give a payslip but fails to do so.

The legislation is now awaiting to receive royal assent, with the majority of the provisions set to commence soon after.

How you can protect your business:

These new laws represent a dramatic shift in the operational framework of workplace relations in Australia.

The Fair Work Act already contains strong accessorial liability provisions which enables the Fair Work Ombudsman to prosecute anyone who it believes is involved in a contravention. To date, these accessorial liability provisions have been used to catch HR advisers, managers, accountants and CFO’s who have been involved in workplace contraventions.

The new laws are designed to complement these existing accessorial liability provisions and come after the Fair Work Ombudsman was granted a substantial increase in funding to help put more inspectors on the road.

Turning a blind eye to workplace non-compliance is no longer a viable option. There is a clear expectation that all employers take reasonable steps to identify and eliminate workplace non-compliance. Those that choose not to act do so as their own peril.

For more information, contact FCB Group.