New law passed to ‘protect vulnerable workers’

Rogue employers will now be forced to prove they pay their staff correctly if they are investigated for underpayments

New law passed to ‘protect vulnerable workers’

The Turnbull Government’s legislation to ‘protect vulnerable workers’ has now passed the Senate.

The new law means there will be a higher scale of penalties (up to 10 times the current amount) for a new category of ‘serious contraventions’ of prescribed workplace laws.

The Minister for Employment, Michaelia Cash said that the Government’s Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 “builds on the Coalition Government’s record of protecting workers from unscrupulous employers”.

“The Coalition Government has taken a strong approach to tackling allegations of fraud and exploitation in Australian workplaces,” said Cash.

“Our Bill not only supports vulnerable workers, but also ensures businesses are operating on a level playing field.”

Moreover, the legislation strengthens protections, including:

  • expressly prohibiting employers from unreasonably requiring employees to make payments (ie ‘cash-back’ arrangements)
  • strengthening the evidence gathering powers of the Fair Work Ombudsman (FWO) to ensure that the exploitation of vulnerable workers can be properly investigated and
  • Introducing stronger provisions to make franchisors and holding companies responsible for breaches of the Fair Work Act in certain circumstances where they are culpable for the breaches.

“The strengthened penalties contained in this Bill will act as a significant deterrent to unlawful practices. They will also ensure that the small minority of unscrupulous operators think twice before ripping off workers,” said Cash.

“The FWO’s new powers and the franchising provisions will be vital in tackling worker exploitation, in important cases like that of 7-Eleven.”

The legislation also means the onus of proof has shifted - employers will be forced to prove they pay their staff correctly if they are investigated for underpayments.

Senior Employment Relations Adviser for Employsure Harry Hilliar said if an employer does not keep or provide correct payslips or accurate employee records and an employee makes an underpayment claim, the onus is on the employer to prove they have paid the employee correctly.

“Failure to keep compliant records may incur newly increased fines in addition to exposing a business to significant back payments,” said Hilliar.

Moreover, the legislation means that franchisors will be held responsible for underpayments by their franchisees where they knew or should have reasonably known of the contraventions and failed to act to prevent the practices.

This will apply where a franchisor has a degree of influence or control over their business networks.

“The Bill was passed with amendments from Labour but still gives the Fair Work Ombudsman questioning powers specifically for investigations into underpayments and exploitation with ‘proper oversight’,” said Hilliar.

“We are interested to see how this plays out for employers and what is defined as proper oversight.

“This Bill emphasises the importance that all employers take responsibility for their obligations under the Fair Work Act and for the impact of the economic decisions that they make.”

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