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Industrial relations: Election result - tougher penalties and a stronger watchdog

By Kristin Ramsey13 Jul 2016

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So after a nail-biting fortnight, Bill Shorten has conceded the election and the Coalition have been returned to Government with Malcolm Turnbull remaining at the helm (at least for the time being). 

As such, I thought it timely to recap briefly on some of the Liberal party’s key election policies in relation to employment and industrial relations and the potential impact of such policies on Australian businesses.

Changes on the horizon

Leaving aside the controversial legislation regarding union corruption and the construction industry watchdog, which triggered the double dissolution election, the Liberal party’s key IR policies relate to the protection of vulnerable workers.

If returned to power the Coalition indicated it would increase the protections available to vulnerable workers by:

  • increasing penalties for employers who underpay workers or fail  to keep proper employment records;
  • introducing a new higher penalty category for “serious contraventions” which would apply in circumstances where an employer intentionally ripped its employees off ( up to 10 times the existing maximum penalties);
  • creating new offence provisions so that parent companies and franchisors can be held liable for breaches by their subsidiaries or franchisees;
  • providing an additional $20 million in funding for the Fair Work Ombudsman; and
  • establishing a Migrant Workers Task Force within the Office of the Fair Work Ombudsman which would be responsible for targeting employers that exploit migrant workers.

Some of these initiatives will require legislative amendment or possibly entirely new legislation and as such it is possible that not all of the above will come to pass. The policies are also severely lacking in detail and, as we all know, the devil is in the detail.

However, the intention is clear, increased compliance powers, tougher penalties and less room for employers to plead ignorance in relation to their obligations.

What does this mean for employers?

There will be more chance of getting caught if you are not meeting your obligations and the penalties you could be exposed to will be higher.

In my opinion, the smart employer would plan to take the following steps to prepare for the above changes:

  1. Audit current terms and conditions to ensure compliance with the applicable modern award or industrial instrument.
  2. Review record keeping requirements and pay slip content to ensure all details are being properly recorded.
  3. Double check the terms and conditions being provided to visa holders and ensure that visa conditions are being met.

The above steps are essential to ensure compliance and reduce the risk of breach of industrial obligations irrespective of whether or not the above initiatives are implemented.

Additional actions for franchisors and parent companies

For franchisors and parent companies, however, there are some more significant steps that you need to consider to obtain visibility over the employment practices of your franchisees and subsidiaries in order to limit your exposure for their breaches.

Such actions may include:

  • putting in place reporting arrangements in relation to staff complaints;
  • establishing a central hotline for staff complaints;
  • educating franchisees and subsidiaries regarding employment and industrial obligations;
  • auditing and monitoring compliance; and
  • reviewing and updating franchise and service agreements to cover off these issues.  

Why act now?

The above actions may take some time to implement (particularly for franchisees and parent companies) and as such businesses are encouraged to start thinking about these matters now rather than waiting to see what will happen from a legislative perspective.

Even if the laws do not change in the manner predicted, the actions recommended above serve a number of useful purposes including improving compliance overall, avoiding the negative publicity that comes from compliance issues and reducing the risk of personal liability for directors and senior management. Oh yes, your staff are likely to be more engaged and productive if they are being paid correctly as well!

How can we help?

Hynes Legal’s expert Employment and Workplace Relations team can audit your business’ current employment arrangements and provide advice on steps you need to take to remedy any compliance issues or otherwise meet best practice standards.

Please contact Kristin Ramsey at kristin.ramsey@hyneslegal.com.au or on 07 3193 0542 for a confidential discussion.

 

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