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Ten times the fine.

UnderpaymentsOctober 3, 2017

Ten times the fine. (Last Updated On: October 3, 2017)

The Government has introduced harsher penalties for employers who fail to comply with the Fair Work Act and keep accurate wage records. Under this new law, passed through the Senate in September, employers can face penalties by up to 10 times for a new category of ‘serious contraventions’.

So, what’s changed?

The Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Act) substantially increases the maximum penalties that apply for certain ‘serious contraventions’ of the Fair Work Act. The maximum penalty will increase from $12,600 to $126,000 per contravention for individuals, and from $63,000 to $630,000 per contravention for corporations.

Higher penalties for record keeping failures.

In addition to raising the maximum civil penalties for ‘serious contraventions’, the Act explicitly prohibits an employer from making or keeping employee records that the employer knows are false or misleading; or giving a pay slip that the employer knows is false or misleading. In addition, employers that do not comply with record keeping obligations and cannot give a reasonable excuse for non-compliance will have to disprove any wage related claims made in a court. For this reason, keeping accurate records is the best defence against underpayment claims.

 ‘Cash-back’ ban.

With the new Act in place, employers are banned from directly or indirectly requiring an employee to spend, or pay an amount of money or part of the employee’s wage if the requirement is unreasonable; and if the payment is directly or indirectly for the benefit of the employer.

Increased liability for franchisors.

From 27 October 2017, the Act has important implications for franchisors in particular. In the event of franchisee non-compliance, franchisors will have greater liability and potential penalties where they had a significant degree of influence or control over the franchisee’s affairs and knew or could reasonably be expected to have known of franchisee non-compliance. Practically speaking, it means a franchisor has increased responsibility to demonstrate they have taken ‘reasonable steps’ to prevent a breach by their franchisees.

With the entire franchise sector under the spotlight, the FWO won’t overlook the legal obligations of a franchisee. The increased penalties magnify the impact on franchisees and validate that all employers across all industries and sectors are liable for their workplace practices.

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