Concerns for vulnerable workers ushers significant amendments to the Fair Work Act.

News headlines in recent years have been littered with exposés of large retail organisations and franchisees (including Myer, Woolworths, Coles, Aldi, 7-Eleven, Caltex and Domino’s Pizza) systematically underpaying and mistreating some of their most vulnerable employees.

The Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Amendment Act) was introduced to address increased community concerns about the exploitation of vulnerable workers, particularly young and migrant workers.

The majority of the changes to Fair Work Act 2009 (Act) introduced by the Amendment Act have been in effect as of 15 September 2017. Additionally, transitional provisions were implemented with respect to franchisor and holding company liabilities. The new obligations placed upon these entities are set to commence from 27 October 2017.

Key Changes

  1. A tenfold increase of maximum civil penalty amounts for ‘serious contraventions[1] of the Act (the maximum penalty is now $126,000 per contravention for individuals and $630,000 for corporations).
  2. From 27 October 2017, franchisors and holding companies potentially becoming liable for contraventions of specified civil remedy provisions of the Act (such as underpayment of employees) by their franchisees and subsidiaries in instances where the franchisor/holding company:
  • had a significant degree of influence or control over the franchisee’s or subsidiary’s affairs;
  • knew or could reasonably have been expected to have known that the contravention, or a similar contravention, would occur; and
  • failed to take ‘reasonable steps[2] to prevent the contravention(s).
  1. Express prohibitions against employers requesting/requiring ‘cashback’ from employees or prospective employees.
  2. Increased investigative and evidence-gathering powers for the Fair Work Ombudsman (FWO).
  3. New/increased civil penalties for:
  • intentionally hindering or obstructing the FWO or its inspectors in the performance of their functions;
  • producing a document or provide information to the FWO that the person knows, or is reckless as to whether the information or the document, is false or misleading; and
  • persons who omits any matter or thing, the omission of which results in information being misleading;
  • failing to keep employee records or not issuing compliant pay-slips; and
  • knowingly making or keeping false or misleading employee records.
  1. The introduction of a reverse onus of proof for employers who fail to abide by record-keeping or pay slip obligations without reasonable cause.

Next Step

Review your business’ current practices and systems to ensure:

  • the minimum employment standards under the Act, Modern Awards and employment agreements are met;
  • your employment record-keeping and employee pay-slips adhere to the requirements prescribed under the Act; and
  • you have adequate processes in place to respond to requests for information relating to potential breaches of the Act from regulators such as the FWO.

Additionally, franchisors and holding companies should carefully analyse their existing associations with franchisees and subsidiary companies (as applicable) and take reasonable steps wherever necessary to prevent possible contraventions by these entities.

Please contact MBA Lawyers if require any assistance with an employment law issue or if you are requested to respond to FWO investigations.

[1] A ‘serious contravention’ takes place when a person knowingly contravenes a civil remedy provision and that conduct is/was part of a systemic pattern of conduct affecting one or more people. In determining whether a systematic pattern of conduct existing the following factors may be taken into consideration:

  • the number of contraventions committed by the person;
  • the period over which the contraventions occurred;
  • the number of people affected;
  • the person’s response, or failure to respond, to any complaints made about the contraventions;
  • the person’s failure to keep compliant employment records; and
  • the person failure to provide payslips in accordance with the Act.

[2] When determining whether ‘reasonable steps’ have been taken to prevent a contravention by the franchisee or subsidiary a court may have regard to a range of matters, including:

  • the size and resources of the franchise or body corporate (as the case may be);
  • the extent to which the person had the ability to influence or control the contravening employer’s conduct;
  • any action the person took to ensuring that the contravening employer had a reasonable knowledge and understanding of the requirements under Act;
  • the person’s arrangements (if any) for assessing the contravening employer’s compliance with the Act;
  • the person’s arrangements (if any) for receiving and addressing possible complaints about alleged underpayments or other alleged contraventions of this Act within the franchise or subsidiary; and
  • the extent to which the person’s arrangements (whether legal or otherwise) with the contravening employer encourage or require the contravening employer to comply with this Act or any other workplace law.

Authored by Senior Associate of MBA Lawyers, Monica Drivas.