2016 Federal Election: ALP and Coalition IR policies propose increased penalties for workplace breaches, and other tough measures for business

Both the Coalition’s recently announced Policy to Protect Vulnerable Workers (Coalition’s Policy) and the ALP’s Rights at Work policy (ALP’s Policy), announced in February this year, proposed significant increases to penalties for businesses who underpay their workers or breach other workplace laws. Under either party’s policy, businesses who are not compliant with workplace laws face significantly increased penalties, and, under the ALP’s policy in certain circumstances, potentially even gaol time.
Set out below is a summary of the policies to date.

The ALP’s Policy The ALP’s Policy proposes significant changes to the system aimed at ‘strengthening and protecting workers’ rights’, including by:

• increasing penalties for underpayments, which the ALP is considering setting at up to $1,080,000 per breach for companies (currently $54,000) or $216,000 for individuals (currently $10,800), and which may include up to 2 years’ imprisonment
• giving Courts powers to disqualify company directors following breaches of particular workplace laws
• for sham contracting:
  • increasing penalties, potentially up to $1,080,000 per breach for companies (currently $54,000) or $216,000 for individuals (currently $10,800), and up to 2 years’ imprisonment
  • developing a definition of ‘independent contractor’, which will include that if a reasonable person would think a worker is an employee, they must be treated as an employee, and provided with all employment related entitlements. Increases to penalties and the imposition of 2 years imprisonment is also under consideration
• introducing changes to unfair dismissal and adverse action protections so workers cannot be dismissed for questioning whether they are an independent contractor or employee
• making directors personally liable for outstanding debts for compensation owing to workers and penalties for breaches committed by their company, addressing employers escaping liability by ‘phoenixing’
• introducing a criminal offence for deliberately exploiting temporary overseas workers where they fail to meet Fair Work Act obligations, even if they are employing the worker in accordance with the terms of their visa. This will be punishable by up to 2 years imprisonment, or fines of up to $43,200 for individuals and $216,000 for companies
• permitting ‘illegal’ foreign workers to bring underpayment claims (currently they cannot)
• requiring employers to provide temporary overseas workers with information on their rights and entitlements under Australian law

The ALP proposes to seek the views of employers and their associations, workers and their unions on the scale of the proposed penalty increases to ‘ensure that the new penalties are an appropriate deterrent’.
The Coalition’s Policy The Coalition’s Policy is focused on increasing protections for vulnerable workers, and includes:

• increasing penalties ten-fold for employers who underpay workers and fail to keep proper employment records, including creating a new penalty category of ‘serious contraventions’ for employers who have ‘intentionally ripped off workers’
• creating a new offence where an employer pays the correct wages but forces employees to repay a portion of their wages
• creating a new offence where franchisors and parent companies fail to deal with exploitation by their franchisees, where they should reasonably have been aware of the breaches and could reasonably have taken action
• increasing the Fair Work Ombudsman’s (FWO) funding by $20 million, and giving it powers to compel employers to provide information and answer questions (similar to those held by the ASIC, ACCC and the ATO), and creating a new penalty provision for obstructing FWO Inspectors or giving false information
• establishing a Migrant Worker’s Taskforce within the FWO to target employers exploiting migrant workers

These proposed changes are in addition to changes already proposed and rejected by the Senate to create a new regulator with greater powers for supervising unions, and the planned re-establishment of the Australian Building and Construction Commission.  Further policies and proposed changes to the IR System may be announced prior to polling day.

Implications for business Workplace relations is likely to be the subject of much debate as we approach the 2 July 2016 election, and irrespective of which political party achieves government there are likely to be significant changes to workplace laws that will affect business. Either way, the exposure for employers who are not meeting their workplace obligations will increase. Accordingly, now more than ever it is important for businesses to:

• ensure they are compliant with the Fair Work Act, awards and other industrial instruments and agreements
• ensure that they have measures in place to manage compliance risks within their business, including all employees being paid at or above workplace minimums
• ensure that their workers are correctly classified (as employees or contractors, as the case may be), with appropriate agreements in place; and
• provide migrant workers will their full range of entitlements

It will also be important for business owners, directors and managers to ensure that they are personally protected from claims for liability for breaches committed by their company.

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This article was written by Denise O’Reilly, Director, O’Reilly Workplace Law

Liability limited under a scheme approved under Professional Standards Legislation If you have any questions about this article, or your obligations under workplace laws, please contact administration@oreillyworkplacelaw.com.au