Recent changes to the Fair Work Act mean that all businesses should be reviewing employee payments and the systems they have in place to manage compliance. The Fair Work Amendment (Protecting Vulnerable Workers) Bill has been introduced to protect vulnerable employees from underpayment.
New penalties for serious contraventions
A new category of penalty is now available under the Fair Work Act and it will be known as a serious contravention. This new category will attract a maximum penalty of $630,000 for companies and $126,000 for individuals for each contravention.
These breaches can relate to the National Employment Standards, an award, enterprise agreement or an employer’s record keeping. Penalties will be applied if a company or individual has knowingly committed a breach or is part of a systematic course of conduct.
Liability of franchisors and parent companies
New offences have been introduced that make franchisors and parent companies liable for underpayments by their franchisees and subsidiaries. Actions will be taken if the franchisees or subsidiaries should have reasonably known of the contravention and failed to act.
Time to review record keeping in Payroll
Record keeping obligations haven’t changed, but the financial penalties for failure to comply have doubled. The maximum penalty for employers who fail to keep proper records has increased to $63,000 for companies and $12,600 for individuals.
Now is a good time to check what your obligations are and ensure your payroll records are compliant. During wage claims, an employer that fails to keep the appropriate records will now face a reverse onus of proof and need to disprove wage claims.
The new laws have also been strengthened to stop employers from demanding payments from employees or engaging in unlawful cash back programs that hide underpayments.
These changes to the Fair Work Act have been designed to help the most vulnerable employees in our society. The consequences of noncompliance are significant for employers, franchisors and parent companies. We strongly suggest to everyone that fits into this category to review their systems and minimise exposure to these new penalties.
If you would like further information regarding your legal obligations please don’t hesitate to contact us on 9525 8688.