Fair Work Legislation to Protect Vulnerable Workers Introduced in Commonwealth Parliament

Wednesday 15 March 2017 @ 1.31 p.m. | Industrial Law | Immigration

The Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) (the Bill) was introduced to amend the Fair Work Act 2009 (Cth) (FW Act). The reason for the amendment of the FW Act is to protect vulnerable Australian and non Australian workers from exploitation by unscrupulous employers. Vulnerable, as defined in the second reading speech, as being including younger workers and foreign workers who have been the subject of recent investigations. 

Additionally, in his second reading speech, the Minister for Immigration and Border Protection, Mr Dutton, addressed the House of Representatives indicating that although a "majority of the employers" follow the law, there are a few out there who exploited workers, such as the employers of the "7-Eleven franchisees". The Bill was introduced specifically in reaction to this issue. 

Key Changes

As stated in the Second Reading speech, the Bill introduces higher penalty rates for 'serious contraventions' of payment-related workplace laws, which include but are not limited to underpayments and demanding cashback (which includes part of an employee's wage to be brought back to the employer). According to the minister, "The penalties [will be] 10 times higher than usual"and can be up to $550,000 and will "only apply" to deliberate and systematic breaches.

The Bill will also ensure, according to the Second Reading speech, that:

"franchisor and holding companies that exercise significant control over their franchisees or subsidiaries will be responsible for underpayments where they turned a blind eye or were complicit in such a breach".

This responsibility also includes franchisor or holding company who should have known of the breach or a similar breach, but did not take reasonable steps to try to prevent it then may be liable for underpayments. 

The Bill also recognises that not all franchisors "influence or control the employment practices of their franchisees" and therefore, the Bill does not mandate a particular requirement for companies who exercise this control. What may help a business to avoid prosecution is the steps they are taking to follow the law and discourage these unfair work practices. If underpayments do happen:

"the employers will remain liable for any breach under the FW Act under existing laws, however a franchisor is required to rectify underpayments and will be given a statutory right to recover any amounts paid, [directly from the] franchisee".

These changes will not hold the franchisor liable for the franchisee's mistakes.

Fair Work Ombudsman, Natalie James has told the Australian Financial Review that when an employer's

"record-keeping is so substandard it prevents our inspectors from determining whether employees are receiving their minimum entitlements we take these matters very seriously."

For this reason as the Minister mentions:

"The Bill strengthens the Fair Work Ombudsman's evidence gathering powers to ensure that deliberate and systematic contraventions of workplace laws can be effectively investigated - even if there is no paper trail."

In addition there has been a $20.1 million in funding from the government to the Fair Work Ombudsman to investigate and gather evidence to identify worker exploitation. 

What's Next

The Bill is a reaction by the government to the recent well publicised cases of employees being underpaid by their franchisor employers, specifically in 7-11 and other stores. It is not expected to be controversial and should pass Parliament to enactment without further amendment.      

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Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) and Second Reading Speech and Supporting Materials as reported in the TimeBase LawOne Service

Fair Work Ombudsman puts business on notice over underpayments (AFR)

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