Issue 89 – Leigh’s Corner

Joshua Easton

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  • Article No.37New Legislation to Protect Vulnerable Workers 

TheFair Work Amendment (Protecting Vulnerable Workers) Bill 2017successfully passed through the Senate on September 4th,
2017 with some minor amendments in relation to the investigative powers of the Fair Work Ombudsman when gathering evidence.

Once these minor amendments are made and the Bill is returned to Parliament this legislation will become law.

The reasons provided by the Government for this legislation were that underpayment of wages remains a significant problem in Australia.

This assertion is based on a number of high profile cases involving large organisations and franchise companies underpaying staff by deliberately ignoring
award and penalty rates, misuse of contractors (sham contracting) and threats to cancel work visas and withhold wages and/or require the wages
to be paid back to the employer.

The largest of these breaches was the 7 Eleven case which has discovered millions of dollars of underpaid wages to employees who were mainly immigrant
or work visa employees in a vulnerable position and the government while acknowledging that the majority of employers abide by the relevant wages
and conditions prescribed in the modern award system have found that some organisations and particularly franchise companies have deliberately
flouted the laws.

The new laws will apply in conjunction with the existing Fair Work Act and the powers of the Fair Work Ombudsman but will provide significant new penalties
for employers who breach the laws with penalties increased up to ten times the existing penalty framework.

When the Bill becomes law, the main changes will be:

  • The introduction of a higher scale of penalties (up to 10 times the current amount) for a new category of ‘serious contraventions’
    of prescribed workplace laws.
  • To prohibit employers from unreasonably requiring employees to make payments (i.e. ‘cash-back’ arrangements or threats to cancel visa arrangements
    or termination of employment)
  • To strengthen the evidence-gathering powers of the Fair Work Ombudsman (FWO) to ensure that the exploitation of vulnerable workers can be properly
    investigated and
  • To introduce stronger provisions to make franchisors and holding companies responsible for breaches of the Fair Work Act where they deliberately
    set out to contravene or avoid paying the correct wages and penalty rates to employees

The Office of the Fair Work Ombudsman will have increased powers in relation to the gathering of evidence and compliance under these laws.

If an official investigation into an employer’s payment of wages and conditions commences the onus of proof under these new laws will be on the employer,
which means the innocent until proven guilty rule will no longer apply in these cases.

The employer must prove that the correct payments are being made to employees and failure to keep proper payslips or appropriate electronic records
may result in significant fines and possible back payments to staff.

The Office of the Fair Work Ombudsman is actively out in the community conducting investigations into claims of underpayment of wages and misuse of
contractors and has been successful with some large penalties being applied to employers in the last 12-18 months.

This legislation will mean more investigations and scrutiny on employers and will possibly mean an increase in claims made by employees.

It is crucial that employers closely examine their wage structures, use of contractors and workplace agreements to ensure that they are compliant and
correct and it would be prudent to get advice where appropriate to ensure that you do not become a test case for the new laws.

Please note that this is general advice for information only and any application of legislation and/or Industrial Relations or contractual requirements may require professional advice to suit your individual circumstances. If you have question for Leigh’s team send us an email
[email protected]