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Tough new laws to stamp out underpayments

Adam Zuchetti
Adam Zuchetti
05 September 2017 1 minute readShare
Boots, stomp, stamp out, compaction

Tough new penalties have been introduced by the government in a bid to reduce the number of employers underpaying their employees.

Under the laws which passed through Federal Parliament earlier this week, employers will face penalties up to 10 times greater under a new ‘serious contraventions’ category.

Additionally, the innocent until proven guilty rule is set to be thrown out for employers, who will now be forced to prove they are paying staff correctly and legally if they become the subject of official investigation – rather than the onus being on investigators to prove wrongdoing.

“If an employer does not keep or provide correct payslips or accurate employee records and an employee makes an underpayment claim, the onus is on the employer to prove they have paid the employee correctly,” said Harry Hilliar, senior employment relations adviser at Employsure.

“Failure to keep compliant records may incur newly increased fines in addition to exposing a business to significant back payments.”

The laws come as an extension to the previously announced crackdown on the franchise sector, which will hold franchisors ultimately responsible for worker underpayments by their franchisees.

“The bill was passed with amendments from Labour, but still gives the Fair Work Ombudsman questioning powers specifically for investigations into underpayments and exploitation with ‘proper oversight’. We are interested to see how this plays out for employers and what is defined as proper oversight,” Mr Hilliar said.

“This bill emphasises the importance that all employers take responsibility for their obligations under the Fair Work Act and for the impact of the economic decisions that they make.”

The Australian Chamber of Commerce and Industry (ACCI) cautiously welcomed the new laws.

“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, said Scott Barklamb, the ACCI’s director or workplace relations.

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

However, Mr Barklamb questioned whether the implementation of these new laws will prove heavy-handed.

“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.

Tough new laws to stamp out underpayments
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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