Before A.I. and robotics take our jobs let’s review a subject that accounting professionals need to consider in your relationship with clients to limit your exposure and theirs.
Having had more work done than a B-grade movie actor, the Fair Work Amendment (Protecting Vulnerable Workers) Bill is now law. The amendments to the Fair Work Act 2009, are the result of the 7-Eleven Inquiry and related systematic underpayment of wages, parliamentary investigations into the abuse of migrant workers, and the outcome of the Productivity Commissions 2015 inquiry.
So yes, it is more red tape and double checking, but it does help to create a more level playing field for businesses generally, even if it potentially means more work for you.
The Ombudsman goes up a weight division
The new provisions give the Fair Work Ombudsman (“FWO“) greater investigative and enforcement powers. The FWO will be able to issue a notice to individuals and companies requiring information or documents as well as requiring an individual to participate in an interview under oath or affirmation. There is also a prohibition for deliberately providing false and or misleading information. Further, hindering or obstructing the FWO in exercising their powers has an increased penalty.
This means if you are holding client records, particularly for franchisee clients, you might need to make the FWO a cup of tea and give them a biscuit if they come knocking for a chat.
Increased penalties
The changes increase penalties for failures by employers to maintain proper records. A serious contravention is conduct by an individual or company that is:
- deliberate or intentional; and
- forms part of a systematic pattern of conduct.
A civil remedy provision under the Act includes a breach of the National Employment Standards or a modern Award. Individuals who engage in serious contraventions of specified civil remedy provisions face a maximum penalty of $126,000. Companies could face a maximum penalty of $630,000. That is a tenfold increase in the penalty currently under the Act.
Perhaps this point provides the basis for you to warn your clients to get their house in order.
Cashback conspiracy
Due to the behaviour of certain employers the amendments will expressly prohibit unreasonable requests by employers on employees to spend or pay back a portion of their wages.
The strengthening of those terms is a result of various franchisees and labour hire employees in the agricultural and horticultural industries coercing their employees to pay back a portion of their wages in cash. In some cases, the franchisee deliberately falsified records to disguise such underpayments so that a brief observation of the books created a cursory view that the franchisee was lawfully paying their employees.
Our recommendation – if you think this is occurring with a client, seek advice immediately.
Specific franchisors and holding company direct or accessorial liability
Under the new provisions, franchisors, and their holding companies, will contravene the Act if their franchisees contravene the Act and the franchisor:
- is ‘responsible’ if it exerts a ‘significant degree of influence or control’ over the affairs of the franchisee; and
- either ‘knew or could reasonably be expected to have known’ that the relevant contravention was, or was likely to be, committed by the franchisee.
Franchisors or holding companies will not contravene the Act if they have taken reasonable steps to prevent the relevant contravention by the franchisee. Reasonable steps might include:
- training franchisees;
- requiring franchisees to comply with the Act and auditing them;
- encouraging cooperation with the FWO; and
- establishing a whistle-blower hotline for employees to report non-compliance.
Franchisors may seek to recover from their franchisees any payments they make to employees by virtue of their liability as a ‘responsible’ franchisor under the new provisions.
Burden of proof on employers who fail to keep proper records
If an application, such as an underpayment of wages claim, is brought against an employer and the employer was required by the Act to keep records or payslips in relation to that matter but did not do so, the burden of proof of the allegation will reverse. It will be up to the employer to prove that they are not liable for the claim, or the full value of the compensation and/or penalties will be payable. So, guilty until proven innocent!
Think list
The reasoning behind the increases to penalties and other requirements is to deter the exploitation of employees and shoddy employment practices. The amendments to the Act will have little effect if businesses are doing what is already required of them.
If your clients are all at sea, your recommendations should be ‘keep it simple, keep appropriate records, and if it doesn’t seem to pass the ‘sniff test’ then seek advice’. If something is concerning you, contact the team at Workforce Guardian for a second opinion or to provide a solution to correct an oversight. I know my Accountant (love your work Malcolm) has enough to deal with over regular amendments to taxation laws and chasing slow-moving clients (like me) without the potential for added liability over client conduct as well.
Charles Watson LLB/GIA(Cert) | Workforce Guardian
- Vulnerable workers and headaches for Accountants - 21 September 2017
