The Coalition wins the election and Labor’s argument that the reduction in penalty rates, for some sectors is unfair, does not resonate with the voters. Does this represent the end of the Coalition’s 12-year industrial relations hangover from ‘Work Choices’ as we are about to embark on a new wave of pro-business IR reform? Put simply, the answer appears to be a resounding No!
While it’s early days for this government and most of the bodies representing business are still pushing for more flexible laws, last week’s announcement of a discussion paper looking at criminalising underpayments by employers and the deliberate use of ‘sham contracting’, to avoid employee entitlements, points to an altogether different theme for 2020 and beyond. In fact, the discussion paper represents the continuation of a theme we saw in the vulnerable worker’s legislation of 2017, which increased penalties for employers tenfold.
Add to this the Fair Work Ombudsman being instructed to get tough with businesses and take a compliance and penalty-led approach to underpayments, rather than mediating settlements, means the likes of SASH co-owners Deve Nelson and Kyle Stagoll, arguing their business is going under because successful restaurants need to underpay workers to survive, just won’t wash.
The Coalition is intent, before anything else, on ensuring employers do the right thing.
The discussion paper and the Attorney-General’s commentary suggest persistent and systematic underpayment of employees will, in the future, be met with criminal penalties of up to 10 years in jail and over $1million in fines for an individual and $5.25million for a business.
Remember, under current legislation, fines can be up to $12,600 for an individual and $63,000 for a business, for breaches of the Fair Work Act. For ‘serious’ breaches, the 2017 legislation increased these fines to $126,000 and $630,000 respectively.
So where does this leave you in your business?
It’s time to recognise the risk. Here are a few key questions to begin:
- Do you know what (if any) Modern Awards cover the employees in your business?
- Are you sure your pay rates and entitlements are in line with the minimum rates set out under the Awards?
- Do you have a contract/flexibility agreement in place which allows you to agree to pay more and opt out of administering complicated penalty rates, leave loading etc. that may be entitlements in the Awards?
- Do you have a system in place to ensure that you stay on top of this, as your business grows? George Calombaris admitted he did not and it cost his business almost $8million in backpay and a $200K fine – and remember, he dobbed himself in to Fair Work. Imagine the fines if an employee had complained and Fair Work found the error!
If any of this has given you pause to think that you would answer No to these questions, then get in touch and let’s start a conversation about how we can ensure this doesn’t happen to your business.
