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High Profile Underpayment Issues Trigger Criminal Penalties

High Profile Underpayment Issues Trigger Criminal Penalties

29 Jul 09:00 by FCB

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The Coalition Government has recently announced that it will seek to criminalise non-compliant and unethical employer conduct. This has arisen in the wake of the recent George Calombaris underpayment scandal and can be seen as an extension of the Government’s general policy position towards the protection of vulnerable workers and further strengthening the audit and compliance tools available to the Fair Work Ombudsman (FWO) and Courts.

This announcement also serves as a timely reminder for employers, particularly those who engage vulnerable workers or pay minimum Award entitlements, to ensure that they are completely compliant with all terms, conditions and obligations of employment as recent experience indicates that ignorance will no longer we tolerated as a defence, and the public at large will expect significantly increased penalties and enforcement action as a result of any identified non-compliant practice.

Current Legislation

In response to the exploitation of vulnerable workers, there has already been the introduction of a higher scale of penalties for serious contraventions. This includes a tenfold increase in the maximum penalty for serious contraventions within the Fair Work Act 2009, a penalty payment of approximately $126,000 for an individual and up to$630,000 for a corporation. Given the number of recent high-profile underpayment matters it obviously raises the question of whether the current penalty regime is fit for purpose. Recent media attention, and Government announcements, are aligned in that the penalty regime needs to be strengthened further including the introduction of criminal penalties for the most serious of underpayment cases identified.

Government Proposal

As many will know, a number of numerous high profile underpayment matters have been publicised recently, including the celebrity chef George Calombaris underpayment settlement with the FWO which involved the restaurant groups connected to George Calombaris entering into an Enforceable Undertaking with the FWO which included the repayment of $7.8 million to employees and a monetary penalty of $200,000.

In addressing this matter, the Prime Minister has advised that the Coalition will drafting further laws to target the exploitation of vulnerable workers and introduce criminal penalties for the worst cases of workers exploitation.

These intentions were made clear by the Attorney General and the IR Minister Christian Porter who acknowledged the significance of the Calombaris settlement, however expressed a general view as to the adequacy of the penalty including whether there could be an improvement in the timeliness of such underpayment cases and the introduction of criminal penalties for repetitious breaches.

The Government have stated, in response to the recent Migrant Workers Taskforce Report, that the Government would be considering ways to impose criminal penalties on the “most serious forms of deliberate worker exploitation“. The clear message arising from the Taskforce Report was that exploitation within the workforce should not be tolerated and that additional penalties and enforcement procedures should be implemented by the Government.

 

The cost of non-compliance is significant both in terms of the value of identified underpayments, penalties and significant resulting damage to a business’s brand and reputation. Contact us today to learn more about how we can help you and your business ensure compliance.