Important News

Fair Work Act amendments enhance penalty provisions & impose new franchising obligations

Monday, 11 September, 2017


Fair Work Act amendments enhance penalty provisions & impose new franchising obligations

Michael Starkey, Associate

Last week, the Federal Parliament passed amendments to the Fair Work Act 2009 (Cth) (the “Act”) which aim to protect “vulnerable workers” from exploitation by employers. The amendments follow a period of intense media scrutiny in relation to such workers, particularly migrant workers employed by franchise companies.

Serious contraventions

The amendments impose penalties of up to $540,000 for a corporation and $108,000 for an individual in respect of a new category of “serious contraventions” of the Act. A contravention of a civil penalty provision of the Act (for example, underpayment of wages) will be considered a “serious contravention” if:

  • the person knowingly contravened the provision; and
  • the person’s conduct constituting the contravention was part of a systemic pattern of conduct relating to one or more other persons.

These new penalty provisions also capture persons who are knowingly involved in a serious contravention.

Employers should bear in mind that the category of “serious contraventions” applies to all employers, not just franchisors.

Franchising obligations

The amendments create a new offence to capture franchisors and parent companies in the event that they fail to take reasonable steps to prevent contraventions within the franchise group. This means that franchisors will be directly exposed to liability for contraventions such as underpayments, even if they do not employ the workers in question themselves.

Other changes

Other changes introduced by the amendments include:

  • new powers for the Fair Work Ombudsman to require the production of evidence in relation to investigations; and
  • new prohibitions preventing employers from implementing cashback arrangements that require employees to spend their money in connection with their employment or prospective employment, where the requirement is unreasonable and the payment is directly or indirectly of benefit to the employer or prospective employer.

Given the nature of these amendments, we encourage all our clients to undertake workplace audits in relation to payment of wages, award compliance, and leave entitlements to identify any systemic issues (within their own organisations and any franchising group) and rectify them.

Please contact your PCS Team Member for further information and assistance.

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