Background to the Bill
In 2016 there were a number of high profile media reports involving the exploitation of temporary work visa holders and other vulnerable workers. These cases led to significant community concern regarding the effectiveness of existing penalties to discourage breaches of the Act, and the need to improve the investigative powers and protections of the FWO. The exploitation of vulnerable workers was examined in a number of reports, including by the Senate Education and Employment References Committee which published A National Disgrace: The Exploitation of Temporary Work Visa Holders. The Ombudsman has also published a number of reports, including A Report on the Fair Work Ombudsman’s Inquiry into the labour procurement arrangements of the Baiada Group in New South Wales and A Report of the Fair Work Ombudsman’s Inquiry into 7-Eleven.
The reports documented numerous cases of systematic underpayment of worker entitlements, deliberately falsified records and coercion of workers to repay employers part of the employees’ wages in cash.
What are the main changes?
The Bill will amend the Fair Work Act 2009 to:
- increase penalties for ‘serious contraventions’ of payment-related workplace laws
- expressly prohibit employers asking for ‘cash back’ from employees
- impose liability on franchisors and holding companies for certain breaches by franchisees and subsidiaries over which they have significant control
- strengthen the FWO’s power to gather evidence and
- introduce penalties for giving false or misleading information to, or hindering or obstructing, the FWO.
The Bill will provide that a breach of a specified civil remedy provision is a serious contravention if the contravening conduct was both:
- deliberate and
- part of a systematic pattern of conduct in relation to one or more other persons (proposed section 557A).
The term deliberate is not defined in the Bill or elsewhere in the Act, however the Explanatory Memorandum states that the term is intended to be synonymous with the term intentional that is used throughout the Act. A contravention by a body corporate will be deliberate if the body corporate expressly, tacitly or impliedly authorised the contravention.
The serious contravention provision applies only to breaches of:
The maximum penalty for a breach of a serious contravention provision is 600 penalty units ($108,000) for an individual and 3,000 penalty units ($540,000) for a body corporate. This maximum penalty is ten times the maximum that is currently available, although the maximum penalty remains unchanged where a contravention is not regarded as a serious contravention.
Franchisor entities and holding companies
The Bill creates a new arm of accessorial liability for franchisors and holding companies beyond the existing provisions of being ‘involved in’ a contravention. This new liability only applies to franchisors that have a significant degree of control over the affairs of their subsidiaries and where a franchisor or holding company should have been aware of the contraventions and could reasonably have taken action to prevent them from occurring.
Those entities that have taken reasonable steps to prevent a contravention of the same or similar character will not be liable for the subsidiary or franchisee’s contravention.
Fair Work Ombudsman
The Bill contains provisions that enhance the FWO’s ability to investigate and prosecute employers in serious cases of worker exploitation. The FWO states that the new provisions will address ‘the deliberate and systemic unlawfulness that some unscrupulous operators adopt as a business model’. While acknowledging that most employers do the right thing, the FWO has described offending employers as a ’pernicious and persistent minority’ that are ‘distorting our labour markets and tarnishing our reputation as a fair and decent place to work’.
The Bill creates new penalty provisions for providing false or misleading information or documents to the FWO or hindering or obstructing the FWO and her inspectors, although the provisions do not apply where a person has a reasonable excuse. The FWO will also receive new powers to issue a notice to a person compelling them to give information, produce documents or attend to give evidence. The maximum penalty for failing to comply with notice is 600 penalty units for an individual and 3,000 penalty units for a body corporate.