New bill set to raise Fair Work penalties by 900%

The federal government recently presented the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 to parliament and it is expected to pass into legislation with bipartisan support.

This bill has far reaching consequences with the proposed changes to the Fair Work Act 2009 including:

  • Introducing a higher scale of penalties for ‘serious contraventions’ of prescribed workplace laws up from $54,000 to $540,000 per offence for a corporation and from $10,800 to $108,000 per offence for an individual
  • Increasing penalties for record-keeping failures.
  • Making franchisors and holding companies responsible for underpayments by their franchisees or subsidiaries where they knew or ought reasonably to have known of the contraventions and failed to take reasonable steps to prevent them.
  • Expressly prohibiting employers from unreasonably requiring their employees to make payments (e.g. demanding a proportion of their wages be paid back in cash).
  • Strengthening the evidence-gathering powers of the Fair Work Ombudsman to ensure that the exploitation of vulnerable workers can be effectively investigated.

Particular attention is also being given to exploitation of migrant workers so businesses need to ensure that visas are in order and any work limitations are complied with.

Ridgeline HR offers a range of services to support businesses in getting compliance right and minimising risks internally and across franchise groups and supply chains.

Fair Work Ombudsman’s new “Record My Hours” App

The Fair Work Ombudsman has released a new “Record My Hours” app to enable workers to automatically record their hours of work using geofencing technology.

In essence, what happens is the worker enters the location of their workplace and the app will automatically track and record the hours that they spend in that location.

The Fair Work Ombudsman has done this to tackle a problem that they commonly encounter in investigating underpayment of wages complaints and that is the employer’s failure to maintain or produce adequate or accurate records.

Between 1 July 2016 and 31 December 2016:

  • 64% of the court cases initiated by the Fair Work Ombudsman involved an element of alleged record keeping or payslip violations and
  • 347 infringement notices with on the spot fines ranging from $540 to $2,700 were issued for record keeping and payslip contraventions.

Employers should ensure that they are doing the right thing with payslips and record-keeping to ensure legal compliance, minimise risks of fines and, of course, because that is all part of looking after your people.

Information on pay slip and record keeping requirements is available here.

Myths in employing young people a target in 2017

In a recent media release, the Fair Work Ombudsman, Ms Natalie James, announced a 2017 campaign to address widespread underpayment of young workers across Australia. Here is part of what she had to say including commentary on 10 myths that the Fair Work Ombudsman’s officers commonly come across.

Ms James says that in 2017 her Agency will have a particular focus on proactively checking that employers of young workers are doing the right thing.

“Young workers can be vulnerable, so we place high importance on checking and treat cases of their rights being contravened more seriously, which means we are more likely to pursue enforcement action,” Ms James said.

Between July 2011 and June 2016, the Fair Work Ombudsman received more than 27,000 requests for assistance from young workers and recovered over $18 million for young workers who had been short-changed.

Ten common young worker myths the Fair Work Ombudsman encounters are:

MYTH 1: Paying low, flat rates of pay for all hours worked is OK if the worker agrees.
FACT: Minimum lawful pay rates are mandatory. In many jobs, penalty rates must be paid for evening, weekend, public holiday and overtime work.

MYTH 2: Lengthy unpaid work trials are OK.

FACT: Unpaid trials are only OK for as long as needed to demonstrate the skills required for the job. Depending on the nature of the work, this could range from an hour to one shift.

MYTH 3: Employees don’t need to be paid for time spent opening and closing a store or for time spent attending meetings or training outside their paid work hours.

FACT: If a meeting or training is compulsory, then it is work. Employees must be paid for all hours they dedicate to work and this includes time spent opening or closing a store. For example, if an employee is required to be at work at 7.45am to prepare for an 8am store opening, they need to be paid from 7.45am. 

MYTH 4: Employers can make deductions from an employee’s wages to cover losses arising from cash register discrepancies, breakages and customers who don’t pay.

FACT: Unauthorised deductions from an employee’s pay are unlawful. Deductions can be made only in very limited circumstances. 

MYTH 5: Employees are obliged to buy store produce such as clothing or food.

FACT: Employers cannot require staff to purchase store produce. This includes any items for which the worker may receive a staff discount. For example, an employer cannot require workers to purchase the particular clothing stocked in a retail outlet.

MYTH 6: Unpaid internships are OK for all inexperienced young workers looking to get a foot in the door.

FACT: Internships can only be lawfully unpaid when they are a requirement of a course at an authorised educational or training institution, or an approved programme of work under Social Security Legislation.

MYTH 7: Employers can pay young workers as ‘trainees’ or ‘apprentices’ without lodging any formal paperwork.

FACT: Employers must negotiate and lodge a registered training contract for an employee in order to lawfully be able to pay trainee or apprentice rates. An employer cannot pay an employee trainee rates just because they are young or new to the job.

MYTH 8: Paying employees with goods such as food or drink is OK.

FACT: Payment-in-kind is unlawful. Employees must be paid wages for all work performed.

MYTH 9: If a worker has an Australian Business Number (ABN) they are an independent contractor and minimum pay rates don’t apply.

FACT: Having an ABN does not automatically make a worker an independent contractor. Fair Work inspectors apply tests of fact and law to determine whether a worker’s correct classification is as an independent contractor or an employee. Whether an employer has labelled a worker as a contractor and required them to obtain an ABN may not be relevant.

MYTH 10: Pay slips aren’t mandatory – employers only need to give employees pay slips if they ask for them.

FACT: Employers must give all employees a pay slip within one working day of pay-day. Employers can give employees paper or electronic pay slips, such as a link sent via email.

There are no surprises here for us at Ridgeline HR because we also encounter misunderstandings like these in the course of our work.

 

Improve wellbeing for better performance

We have all heard about serious societal problems such as alcohol and drug abuse, domestic violence, the health effects of smoking, mental health issues plus obesity and associated challenges with healthy eating and physical activity and the incidence of diabetes.

You no doubt have people you know including employees and contractors in your business who have these sorts of challenges.

So what can you do about it as a business owner and employer and why should you?

The business case for productivity

When you invest in a car or a new piece of plant, you look after it because it is a valuable asset and you want to get the best return on it, minimise costs by servicing and maintaining it in optimal condition and be able to show it off with pride.

There is a mountain of research that leaves no room for any doubt – investing in your peoples’ wellbeing pays dividends in productivity by:

  • Improving capabilities and performance
  • Reducing absenteeism
  • Getting better attraction and retention of talent
  • Reducing risks of accidents and injuries and WorkCover costs
  • Enhancing employee morale and engagement.

In the publication “Healthy workers, healthy business”, WorkSafe says: “There is a great deal that businesses can do to maintain a healthy workforce and keep talented, productive workers on board. An increasing body of evidence supports the idea that employee health and wellbeing programs can have major benefits for your business, from reductions in sick leave to a boost in morale and productivity.”

I hear many employers say: “Our people are our greatest asset”. So, if that is the case, shouldn’t we be looking after them too? Apart from it being the right thing to do, it is just good business, isn’t it?.

The business case for social responsibility

A wise man once said to me “You spend a third of your life at work so you had better enjoy it.”

Equally, if I spend a third of my time at work, what I do at work and how I am treated at work has a significant impact on my life and how I live it including my health and my relationships.

Results from 300,000 Work Health checks delivered in Victoria show why business leaders should be concerned. More than 66% of participants were found to have a medium to high risk of developing type 2 diabetes and/or cardiovascular disease. In addition, 92.9% of workers tested were not eating enough fruit and vegetables, and 70% weren’t doing enough exercise. (S Radi and M Sim, WorkHealth Program Evaluation (Monash University Melbourne, April 2011).

So clearly, given the scope of the problem, employers can make a significant contribution to the wellbeing of their people and the general community by helping people with education and opportunities to make healthy choices at work.

Introducing the Achievement Program

The Achievement Program is part of the Victorian Government’s vision for a Victoria free of the avoidable burden of disease and injury, so that all Victorians can enjoy the highest attainable standards of health, wellbeing and participation at every age. Launched in 2012, it boasts a membership of more than 3000 early childhood services, schools and workplaces from around Victoria.

Image provided courtesy of Achievement Program, Department of Health and Human Services, Victorian Government, December 2016

When you register with this free program, you get access to guidelines, tools and templates that can assist you in planning, implementing and evaluating initiatives to improve worker wellbeing in any of the following five key areas:

  • Alcohol
  • Healthy eating
  • Mental health and wellbeing
  • Physical activity
  • Smoking

You can implement things at your own pace and in accordance with your peoples’ preferences and you can also apply for recognition for successfully implementing programs in any of the above areas.

That shows job candidates that you are a good employer and helps to retain and motivate the people you have.

Further information is available at http://www.achievementprogram.health.vic.gov.au/workplaces or contact me on 0438 533 311 or at peter@ridgelinehr.com.au.

Protecting against accessorial liability

The Fair Work Ombudsman has been very active in pursuing individuals who it believes have reasonably been a party to contraventions of minimum wages and conditions whether overtly in action or by omission or failure to exercise due diligence.

Investigations into cases involving large businesses such as Coles and Woolworths and Myer who contract work out to other entities which do not meet their compliance obligations have been undertaken from the perspective that the principal in the supply chain should have known and acted to prevent the non-compliance even though it was not the actual employer.

This raises questions about who might be considered an accessory to a contravention and here is what the Fair Work Ombudsman recently had to say about that.

Section 550

Under section 550 of the Fair Work Act; a person who is involved in a contravention of the Act is held responsible for that contravention. A person is involved in a contravention if they:

  • have aided, abetted, counselled or procured the contravention; or
  • have induced the contravention, whether by threats or promises or otherwise; or
  • have been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
  • have conspired with others to effect the contravention.

What does this mean for individuals?

Anyone who is found to be involved in a contravention of the Act can be personally liable for compensating employees and paying penalties imposed by the court. The Fair Work Ombudsman has used this provision to hold company directors personally accountable for the actions of their companies. This effectively means that liquidating a company is no guarantee of avoiding the consequences of non-compliance with the Act.

But section 550 can extend to anyone involved in a contravention. This can include human resources and payroll officers, line managers, accountants and advisors.

What does this mean for companies?

If a company, as the employing entity, contravenes the Act: that company is automatically responsible for that contravention and may have penalties imposed by a court. But under section 550 a company that is not the employing entity, may be found to be involved in a contravention and may also have penalties imposed by a court.

This is important for companies to consider especially in their supply-chain and procurement processes. Effectively it means that companies cannot outsource their non-compliance. For example if one company contracts another company to supply cleaning staff; and those cleaners are underpaid: both companies may be held accountable by a court. 

This has broad implications for businesses that use outsourcing, franchise arrangements or complex supply-chains. The full scope of section 550 in these types of arrangements has not been settled by the courts, however, the Fair Work Ombudsman is determined to take action to ensure a culture of compliance is established and maintained broadly across all businesses.

You should also note that fines of up to $10,800 per offence can be imposed on individuals and up to $54,000 per offence can be imposed on companies.

What you need to do

Firstly, if you are an employer, ensure that you are aware of and comply with your own obligations as an employer and that these are properly documented in employment contracts/letters of offer etc.

Secondly, if you contract work out to another party, verify that that contract enables the other party to be capable of meeting its employment compliance obligations and that that other party actually does so.

Thirdly, if you are an internal HR Manager or other Manager, ensure that you have processes in place that genuinely test whether work contracted out is conducted in accordance with employment obligations (ie people are contracted and paid appropriately). This needs to be more than having the contractor just tick a box

Fourthly, if you are an external business advisor, ensure that the advice that you provide is competent and, if you are not confident of your competency in employment matters, engage a delivery partner to provide that competency.

Ways that we can help

Ridgeline HR has been providing just that sort of advice since we started in 2000. We have done this with hundreds of clients across all sorts of industries throughout Australia. We have serviced the members of an industry association and the clients of accounting firms for many years and we have been recognised by federal government agencies in the past for our expertise.

We now also offer a supply chain education and audit service which in essence involves us auditing supply chain participants’ compliance and advising them on any areas that they need to fix. This proactive approach to assuring downstream compliance provides a simple and practical approach to managing the risk of accessorial liability.

If you are interested in exploring ways in which we might be of assistance in these areas, call Peter Maguire on 0438 533 311 or email peter@ridgelinehr.com.au