PENALTIES FOR BREACH OF WORKPLACE LAWS INCREASE TENFOLD
HLS LEGAL | October 18, 2017
From 15 September 2017, the new Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Amendment Act) took effect to amend the Fair Work Act 2009 (FW Act). The Amendment Act was introduced to better deter unlawful practices such as those that involve the deliberate and systematic exploitation of vulnerable workers, such as migrant workers.
The amendments however, have broader reach.
WHAT ARE THE CHANGES?
In summary, the major changes introduced by the Amendment Act include:
The ability for holding companies to now be responsible for underpayments and other breaches of the FW Act by their subsidiaries;
Increased penalties for “serious contraventions” of the FW Act;
Increased penalties for failure to keep employee records and issue pay slips in accordance with the FW Act;
A reverse onus of proof for employers who fail to meet record keeping and pay slip obligations;
Prohibiting employers from unreasonably requiring an employee to make payments, such as demanding a cash back after the payment of wages; and
Increased powers of the Fair Work Ombudsman to gather evidence during investigations (similar to the powers already available to corporate regulators like the Australian Securities and Investment Commission) and the removal of the privilege against self-incrimination for individuals.
RESPONSIBILITY OF HOLDING COMPANIES FOR SUBSIDIARIES
Holding companies can now be responsible in certain circumstances for the conduct of its subsidiaries where the subsidiaries fail to follow the FW Act. The new responsibilities apply where holding companies have a significant degree of influence or control over their business networks, have known the contraventions would occur and failed to take reasonable steps to manage the risk. We have prepared a separate article focusing specifically on this amendment.
Higher penalties for “serious contraventions” of civil remedy provisions have been introduced. A contravention is “serious” if the person knowingly contravened the provision and the conduct of the person was part of a systemic pattern of conduct.
The reference to a ‘systematic pattern of conduct’ is to a recurring pattern of methodical conduct or series of coordinated acts over time. It does not encompass ad hoc or inadvertent conduct.
In determining a systemic pattern of conduct, a court may have regard to, among other things:
The number of contraventions committed;
The period over which the contraventions occurred;
The number of persons affected by the contraventions;
The person’s response or failure to respond to complaints made about the contraventions; and
Whether the person failed to comply with the requirements for employee record keeping and the issuing of pay slips.
Serious contraventions of civil remedy provisions can apply, for example, to breaches of the National Employment Standards (NES), enterprise agreements, modern awards, and the record keeping and pay slip obligations under the FW Act. The effect of this amendment, is to supplement the existing penalty regime under which intention does not need to be proved.
The maximum penalty that may be awarded by a Court for contraventions are outlined in the table below:
|Serious contravention||A contravention other than a serious contravention|
Breach by individual
Breach by body corporate
A body corporate may be liable for a serious contravention, where the body corporate knowingly contravenes a civil remedy provision of the FW Act, by tacitly or impliedly authorising the contravention.
The authorisation may be given by an individual within the organisation, or via a policy, rule, course of conduct or practice that exists within the organisation.
This does not extend to circumstances where the misconduct of a ‘rogue’ senior manager is acting outside the corporation’s policies. There is no liability in this circumstance if the body corporate can prove that it exercised due diligence to prevent the ‘rogue’ conduct.
EMPLOYEE RECORD KEEPING AND PAY SLIP OBLIGATIONS
Employers are required to keep certain employee records and issue pay slips containing prescribed information under the FW Act. A failure to do so may result in an employer having to pay civil penalties.
Changes made by the Amendment Act have:
Introduced penalties for employers who knowingly provide pay slips to employees that are false or misleading;
Increased the maximum penalty for failing to keep employee records or issue pay slips from 30 to 60 penalty units and introduced a maximum penalty of 600 units for an individual and 3000 units for a body corporate for a “serious contravention”; and
Increased the maximum penalty for knowingly making/keeping false or misleading employee records from 20 to 60 penalty units and introduced a maximum penalty of 600 units for an individual and 3000 units for a body corporate for a “serious contravention.”
The value of these penalty units is captured by the table above, which outlines the maximum penalties.
The increase in penalties is aimed at deterring those employers who deliberately fail to keep records in order to disguise underpayments. It is not designed to target employers who genuinely overlook employee record keeping requirements.
Additionally, a reverse onus of proof has been introduced where an employer does not meet record keeping or pay slip obligations and they cannot provide a reasonable excuse. This means employers will have to disprove allegations in wage claims made against them in a Court.
REMOVAL OF PRIVILEGE AGAINST SELF-INCRIMINATION
Inspectors of the Fair Work Ombudsman have powers to require a person to produce a record or a document and to interview any person, for example about the particular practices in a workplace.
Previously, the FW Act provided that in the case of an individual, these records and interviews were not admissible in evidence against the individual in criminal proceedings. This is referred to as a privilege against self-incrimination.
The Amendment Act has removed the privilege against self-incrimination (subject to certain immunities and safeguards) by providing that a person is not excused from giving information, producing a record or document, or answering a question on the ground that to do so might incriminate the person, or expose the person to a penalty.
The amendments present an opportune time to revisit your business’ existing arrangements to ensure that your business complies with the FW Act.
If you have any questions about how the amendments to the FW Act may affect your business, please contact HLS Legal on (08) 9322 5202.
This article is intended to be informative only and does not constitute legal advice. If you are concerned about your individual circumstances, please contact a lawyer.
 Explanatory Memorandum, Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) i.
 Ibid 14 para 101.
 Fair Work Act 2009 (Cth) s 557A(1).
 Explanatory Memorandum, Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) 4 para 24.
 Fair Work Act 2009 (Cth) s 557A(2).
 Ibid s 539.
 Explanatory Memorandum, Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) 2 para 5.
 Fair Work Act 2009 (Cth) s 539; Crimes Act 1914 s 4AA.
 Fair Work Act 2009 (Cth) s 557B.
 Explanatory Memorandum, Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) 5 para 32.
 Ibid 5 para 33.
 Fair Work Act 2009 (Cth) s 536(3), item 29 s 539.
 Ibid s 535(1), 536(1), item 29 539.
 Ibid s 535(4), item 29 s 539.
 Explanatory Memorandum, Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) 3 para 16.
 Fair Work Act 2009 (Cth) s 557C.
 Ibid s 713(1); Explanatory Memorandum, Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) 19 para 143.