Senate legislates tougher underpayment penalties

New laws will see penalties of up to $630,000 for “unscrupulous” employers who knowingly underpay their employees

The Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 will see franchisors and holding companies held accountable for any breaches of employment laws by their franchisees and subsidiaries.

It will also increase penalties for record-keeping failures, and give the Fair Work Ombudsman new investigative powers.

The bill expressly prohibits employers from “unreasonably requiring their employees to make payments (e.g. demanding a proportion of their wages be paid back in cash)”, a practice that was discovered during an inquiry into 7-Eleven franchisees.

“The Bill addresses increasing community concern about the exploitation of vulnerable workers
(including migrant workers) by unscrupulous employers, and responds to a growing body of
evidence that the laws need to be strengthened,” says the House of Representatives in its explanatory memorandum.

“The Bill will increase relevant civil penalties to an appropriate level so the threat of being fined acts as an effective deterrent to potential wrongdoers.”

According to the Bill, the maximum civil penalty for a ‘serious contravention’ of prescribed workplace laws involving deliberate conduct is $120,600 for individuals and $630,000 for bodies corporate.

Australian Chamber of Commerce and Industry Director of Workplace Relations Scott Barklamb said:

“Any employer who knowingly underpays not only harms their employees, they gain an unfair advantage over their competitors and harm the vast majority of business owners who do the right thing.

“Most employers put in a lot of time and effort to understand and comply with their complex obligations under Australian employment law. 

“It is important these new investigation powers and penalty provisions are used in a targeted way and only in the most serious and repeated cases of non-compliance.

“Australia has one of the most complex systems of workplace relations in the world. Lengthy and prescriptive industrial awards and overlapping legislated standards mean there is a high risk of inadvertent error.

“We encourage all employers to familiarise themselves with their obligations and to seek advice and assistance from their State or Territory Chamber or industry association. “

The pharmacy sector is no stranger to underpayment debacles.

In December last year, Chemist Warehouse entered into a compliance partnership with the Fair Work Ombudsman after back-paying almost 6000 workers more than $3.5 million.

“The scale of this alleged underpayment and the number of staff affected is disturbing,” said the Pharmacy Guild at the time.

“It has the potential to undermine the trusted reputation of other complying pharmacies.”

The Guild pointed out that Chemist Warehouse pharmacies are not currently Members of the Guild, and were not Members at the time of the underpayments.

“The exposure of the Chemist Warehouse underpayments is a timely reminder to all in the pharmacy sector of the need to comply with workplace legal requirements.”

Regarding the new bill, the Guild reminds all pharmacies of their legal requirements.

“These changes reinforces the importance for all community pharmacies to ensure that they comply with the terms, conditions and remuneration requirements of the respective workplace instrument, being either the Pharmacy Industry Award 2010, state-based Award or an Enterprise Agreement,” National President George Tambassis tells members.

“Wage theft is an scourge in the pharmacy sector and we welcome new legislation to tackle this illegal behaviour by some employers,” says Chris Walton, CEO of Professionals Pharmacists Australia.

“Over the past year, Professional Pharmacists Australia has lodged a number of wage theft claims in the courts on behalf of members, against pharmacy owners.

“These claims have all been settled at Mediation, without penalties being applied, but we will now be able to seek penalties in future cases where an unscrupulous pharmacy owner has knowingly underpaid their employees.

“Wage theft has a significant negative impact on working pharmacists who are already underpaid for their qualifications, and it is one factor driving people out of the industry to seek work with better employment conditions.”

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