Summary of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017

By James Sanders, Associate, MST Lawyers

On 14 September 2017, the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 received royal assent and became new law called the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth) (“the Act“).  The Act amends the Fair Work Act 2009 (Cth) (‘FW Act‘).

This article summarises key features of the Act.

Amendment #1: Increasing maximum penalties for contraventions of certain civil remedy provisions

The Act introduces new civil penalties for ‘serious contraventions’ which are ten times higher than those currently set out in the Act.

Under the Act, a ‘serious contravention’ will be found if a person knowingly contravened a provision, and the conduct was part of a systematic pattern of conduct relating to one or more others persons.

In determining whether the person’s conduct was part of a systematic pattern, a Court may have regard to:the number of contraventions committed by the person;the number of contraventions committed by the person;

a.  the number of contraventions committed by the person;the period over which the

b.  the period over which the contraventions occurred;the number of persons affected by the contravention;

c.  the number of persons affected by the contravention;(ca)  the person’s response, or failure to respond, to any complaints made about the relevant contraventions;

ca.  the person’s response, or failure to respond, to any complaints made about the relevant contraventions;

d.  whether the person failed to keep employment records in accordance with the FW Act; and

e.  whether the person failed to provide a payslip in accordance with the FW Act.

Amendment #2: Liability of responsible franchisor entities and holding companies

The Act introduces a new civil penalty liability for franchisors.

A ‘responsible franchisor’ will contravene the Act if one of its franchisees contravenes a civil remedy provision in the FW Act (see below) and either:the franchisor or an officer of the franchisor knew or could reasonably be expected to have known that the contravention by the

a.  the franchisor or an officer of the franchisor knew or could reasonably be expected to have known that the contravention by the franchisee would occur; or

b.  at the time of the contravention by the franchisee, the franchisor or an officer of the franchisor knew or could reasonably be expected to have known that a contravention by the franchisee of the same or a similar character was likely to occur.

The Act defines “responsible franchisor” as a franchisor that has a significant degree of influence or control over the franchisees’ affairs.

The various civil remedy provisions under the FW Act which can be contravened by a franchisee and which can expose a franchisor to the newly proposed statutory liability includes:

  • subsection 44(1) (contraventions of the National Employment Standards);
  • section 45 (contraventions of modern awards);
  • section 50 (contraventions of enterprise agreements);
  • section 280 (contraventions of workplace determinations);
  • section 293 (contraventions of national minimum wage orders);
  • section 305 (contraventions of equal remuneration orders);
  • subsection 323(1) (methods and frequency of payment);
  • subsection 323(3) (methods of payment specified in awards or enterprise agreements);
  • subsection 325(1) (unreasonable requirements for the employee to spend or pay an amount);
  • subsection 325(1A) (unreasonable requirement for a prospective employee to spend or pay an amount);
  • subsection 328(1), (2) or (3) (employer obligations in relation to guarantees of earnings);
  • subsection 357(1) (misrepresenting employment as independent contracting );
  • section 358 (dismissing an employee to engage as an independent contractor);
  • section 359 (misrepresentations to engage an individual as an independent contractor);
  • subsection 535(1), (2) or (4) (employer obligations in relation to employee records); and
  • subsection 536(1), (2) or (3) (employer obligations in relation to pay slips).

The Act appropriately limits the franchisor’s exposure to liability if, at the time of, or prior to, the franchisee’s contravention, the franchisor had taken reasonable steps to prevent the contravention.

In determining whether a franchisor took reasonable steps to prevent a contravention, a Court may have regard to all relevant matters, including:

a.  the size and resources of the franchise;

b.  the extent to which the franchisor had the ability to influence or control the contravening franchisees’ conduct in relation to the contravention;

c.  any action the franchisor took to ensure the franchisee had reasonable knowledge and understanding of the requirements under the applicable provisions of the FW Act;

d.  the franchisor’s arrangements for assessing the franchisee’s compliance with the applicable provisions of the FW Act;

e.  the franchisor’s arrangements for receiving and addressing complaints about alleged contraventions within the franchise; and

f.  the extent to which the franchisor’s arrangements with the franchisee encourage or require franchisee to comply with the FW Act or other workplace law.

Restitution from the franchisee

The Act provides that where a franchisor has paid to, or on behalf of, an employee, an amount pursuant to an order relating to a contravention by a franchisee, and the franchisor has not been able to recover that amount from the franchisee, the franchisor may commence proceedings against the franchisee.

Holding Companies

The Act creates similar provisions in relation to holding companies and their subsidiaries.

Amendment #3:  Unreasonable deductions or requirements to spend or pay an amount

The Act states that a term of a modern award or an enterprise agreement has no effect if that term permits or has the effect of permitting an employer to deduct from an amount that is payable to an employee if the deduction is:

a.  directly or indirectly for the benefit of the employer, or a party related to the employer; and

b.  unreasonable in the circumstances.

A similar section is included in the Act regarding unreasonable requirements to spend money or pay an amount, in relation to the performance of the employee’s work.

This variation may have the effect of nullifying certain deduction clauses currently included in previously approved enterprise agreements.

Amendment #4: Powers of the Fair Work Ombudsman

The Act proposes to extend the Fair Work Ombudsman’s (‘FWO‘) ability to require a person to provide information, where the FWO reasonably believes that the person:

a.  has information or documents relevant to an investigation into a suspected contravention of the FW Act; oris capable of giving evidence that is relevant to such an investigation.

b.  is capable of giving evidence that is relevant to such an investigation.

This expands the FWO’s previous power to serve a ‘Notice to Produce’ on employers demanding the production of certain employment records or documents.

Amendment #5: Hindering and obstructing the FWO and inspectors

The Act provides that a person must not intentionally hinder or obstruct the FWO in the performance of their functions.  A new civil penalty provision will be included that provides for a penalty of 60 penalty units (equating to $12,600 during FY17/18) where a person obstructs a Fair Work inspector.

Amendment #6: False or misleading information or documents

The Act also provides that an employer must not make or keep a record that the employer knows is false or misleading, and must not give a payslip that the employer knows to be false or misleading.

A new civil penalty provision will be inserted for employers who produce a document or provide information to the FWO that the employer knows, or is reckless as to whether the information or the document is:false or misleading; or

a.  false or misleading; or

b.  for information – omits any matter or thing without which the information is misleading.

Amendment #7: Records

If in a proceeding in about a contravention by an employer of a civil remedy provision, an applicant makes an allegation in regarding a matter, and the employer was required to:make and keep a record; or

a.  make and keep a record; or

b.  make available for inspection a record; or

c.  give a payslip,

in relation to a matter and the employer fails to comply with the requirement, the employer has the burden of disproving the allegation.

This is not the case where the employer provides a reasonable excuse as to why there has not been compliance with the above requirements.

Conclusion

The Act received royal assent on 14 September 2017.

The franchisor and holding company liability provisions in the Act will commence effect on 27 October 2017.

All other provisions in the Act (including the serious contravention provisions) commenced effect on 15 September 2017.

Franchisors and holding companies who have not already taken reasonable steps to mitigate potential liability under the Act should contact the MST Lawyers Employment Law team by email or call +61 3 8540 0200 to discuss their options.