Media Release │ Fair Work Bills to protect vulnerable workers a wake-up call for all employers with massive increases in penalties, says MinterEllison

7 March 2017

The Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 and the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill 2017 introduced into Parliament by the Federal Government are designed to protect vulnerable workers, abolish four yearly modern award reviews and deal with procedural deficiencies with the making of enterprise agreements.

MinterEllison HR&IR specialist partner, Gareth Jolly, said the Vulnerable Workers Bill represents the final component of the Coalition's policy to protect vulnerable workers that it took to the 2016 election.

"If it's passed, the Bill will increase fines by a factor of ten – to more than $500,000 – for deliberate and systematic breaches of industrial instruments and the National Employment Standards," Mr Jolly said.

"It will also make holding companies and franchisors liable for breaches by subsidiaries and franchisees where they knew, or ought to have known, about the breaches and did not take reasonable steps to prevent them.

"And finally, it provides the Fair Work Ombudsman with powers similar to those held by other regulators such as ASIC and ACCC. The Ombudsman will be able to compel individuals to attend interviews and to override the privilege against self-exposure to penalty – that is, a person cannot decline to answer questions on the basis that they may incriminate themselves."

Mr Jolly believes that franchisors and corporate groups should be planning now what they will do to ensure compliance with the Vulnerable Workers Bill, once it becomes law.

"Important things to consider include what steps they need to take to ensure compliance by franchisees and subsidiaries and what contractual mechanisms they need to put in place to recover settlements of underpayment claims.

"A subsidiary includes, for example, a majority owned subsidiary – not just wholly owned subsidiaries – or a company where the holding company controls the composition of the board,"
he said.

But the proposed legislation is not just about franchisors. The introduction of serious contraventions, and the massive fines associated with them, mean all employers should be re-doubling their efforts to ensure their own compliance with industrial instruments and the National Employment Standards.

"As most prosecutions generally involve multiple breaches, penalties often come to hundreds of thousands of dollars. This could now become millions where deliberate breaches are concerned."

In relation to the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill, Mr Jolly said it essentially provides (amongst other things) for the abolition of the four yearly modern award reviews.

"Notably, the last four yearly review is still going – over three years in – and would shortly be overtaken by the next four yearly review," he said.

Importantly, however, the Fair Work Commission can still make or vary a modern award if it is necessary to achieve the modern awards objective.

"So the unions can still run test cases, as can employers. However, there is a power for the Fair Work Commission to dismiss the application if the same subject has been dealt with in a four yearly review."