The Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 came into effect on the 15th September 2017. This means new, higher penalties for breaches of employee record keeping and ‘serious contraventions’ of workplace laws (this includes breaches of the National Employment Standards, Modern Award provisions, Enterprise Agreements, National Minimum wage and the method and frequency of paying wages).
Changes under this Amendment Act are related to the lengthy, high profile prosecution by the Workplace Ombudsman of 7 Eleven and several of their Franchisees for the endemic, systematic underpayment of wages through various ‘cash-back’ arrangements aimed at exploiting vulnerable staff.
The Workplace Ombudsman’s investigation uncovered that a number of Franchisee’s within the 7 Eleven network underpaid their workers over a number of years through a series of ‘cash-back’ arrangements. The ‘cash back’ scheme basically operated in a way whereby employees were paid legitimate award rate wages, workers were then told to give a portion of their wages back to their employer in cash as “other people will work for a lower rate” or “you will stop getting shifts if you don’t agree to this.” The employees involved were more often than not vulnerable workers – people on visas, student visas, young people and migrants so desperate to secure and keep a paid job that they agreed to these arrangements.
The Fair Work Act changes to protect vulnerable workers include:
- increased penalties for ‘serious contraventions’ of workplace laws;
- make it clear that employers cannot ask for ‘cash back’ from employees or prospective employees;
- increased penalties for breaches of record keeping and payslip obligations;
- employers who don’t meet record keeping or pay slip obligations and cannot provide a reasonable excuse will need to disprove wage claims made in a court (the onus is on the employer to prove they did not breach the Fair Work Act);
- strengthen the powers of the Ombudsman to collect evidence in investigations; and
- introduction of new penalties for employers providing false or misleading information or obstructing a Fair Work Ombudsman investigation.
The above changes apply to all employers, companies and employees covered by the Fair Work Act but are particularly important for:
- franchisors and holding companies;
- vulnerable employees; and
- people or companies that don’t voluntarily co-operate with Fair Work Ombudsman investigations.
As an employer you need to make sure you are meeting your record keeping and pay slip obligations, you are paying in accordance with a Modern award or other instrument and adhering to the Ten National Employment Standards.
Interestingly there are still a number of employers across several industries engaging in unpaid trials with prospective employees. In some cases these unpaid trials may be lawful for instance to legitimately demonstrate particular skills and or competence under the direct supervision of the employer for a reasonable length of time for a genuine job vacancy. In many cases unpaid trials are not lawful for example the duration is longer than a few hours or one shift, the worker is unsupervised therefore there is no meaningful measurement of their skills, where the work undertaken is more than a simple demonstration of their ability or no actual position is available. In these circumstances the trial should be paid.
It is important to comply with workplace laws for the sake of your employees, prospective employees, the success of your business, brand reputation and mitigating the risk of personal and or company penalties.
The Fair Work Act Amendments provide for increased penalties for contraventions of workplace laws including:
- On the spot infringement notices (up to $1260 per breach for an individual and up to $6300 per breach for a corporation).
- Taking the company to Court as well as ‘a person’ if they were involved in the companies contravention of workplace laws. ‘A person’ includes a Company Director, HR Manager or other manager, an Accountant and a business involved in a supply chain (eg labour hire).
Since the investigation 7 Eleven have repaid $26 million in back pay to 680 workers. One Franchise owner in Sydney was fined $214,200 (personal fine of $35,700 and company fine of $178500). Whilst this was the largest investigation to date by the Fair Work Ombudsman don’t think that as a small business owner you are immune, they don’t just target large corporations. As a business owner it is up to you to understand your employment obligations in the broader Industrial Relations landscape.
EastCoast Human Resource Group can provide guidance and support for you as a business owner to understand your legislative workplace obligations through our series of educational Masterclass workshops and consulting services.
To book your Masterclass or arrange a complimentary 20 minute introductory meeting with our experienced Consultants please call us today.
By Heidi Bishop Senior Consultant