Australia: Major Parties Outline Proposed Policies To Crack Down On Widespread Exploitation Of Vulnerable Workers

Last Updated: 13 July 2016
Article by Adam Salter

Factual Background. In August last year, allegations came to light that large numbers of retail franchisees had systematically underpaid migrant workers, using threats and coercion to maintain workers' silence. The revelations drew public condemnation and forced the federal government and opposition to consider amendments to the Fair Work Act 2009 (Cth) ("FWA") to counter employee exploitation.

In the past few months, the two major parties have announced proposals to tackle the problem. In our January 2016 Update we reported on the Australian Labor Party's early proposals, and in our March 2016 Update, we analysed a bill introduced into the Senate by Labor. On 19 May 2016, the Liberal Party announced its proposals to deal with employee exploitation, and this Update will primarily focus on those proposals.

Liberal Party Proposals. On 19 May 2016, a policy document was released by the Minister for Employment, Senator Michaelia Cash. The document, The Coalition's Policy to Protect Vulnerable Workers ("Policy"), outlines in broad strokes the Liberal Party's proposals to crack down on employers exploiting vulnerable employees. The Policy is an important blueprint of what a Liberal Government bill might look like. Important proposals within the Policy include:

  • Amending the FWA to increase penalties payable by employers who deliberately and systematically underpay workers and fail to keep proper pay records. The current maximum penalties for underpaying employees is $10,800 per breach for individuals and $54,000 per breach for corporations. The proposed penalties for underpaying employees is $108,000 per breach for individuals and $540,000 per breach for corporations. These are significant increases in pecuniary penalties.
  • Introducing a new offence that makes franchisors and parent companies liable for breaches of the FWA by their franchisees or subsidiaries, in circumstances where the franchisor should reasonably have been aware of the breaches and could reasonably have taken action to prevent the breaches from occurring.
  • Amending the FWA to strengthen the investigatory powers of the Fair Work Ombudsman. The Policy proposes that the Ombudsman be given powers that resemble the powers of the Australian Securities and Investments Commission, the Australian Competition and Consumer Commission and the Australian Taxation Office—currently the most powerful federal regulatory agencies.
  • Establishing a Migrant Worker Taskforce within the office of the Fair Work Ombudsman.
  • A promise to inject an additional $20 million of funding to the Fair Work Ombudsman.

In a statement released on 19 May 2016, Senator Cash remarked that these proposals were intended to improve safeguards for "vulnerable workers who have been let down ... by blatant non-compliance with workplace laws by employers across a number of industries and in many cases, multinational corporations who ignore their obligations under Australian laws." Senator Cash went on to criticise Labor's Bill, arguing that the proposed changes would fail to address the particular conduct that was leading to the exploitation of employees.

Labor Party Proposals. In our January 2016 Update, we reported on policy announcements that the Labor Party made early in the year. In our March 2016 Update, we reported on the Fair Work Amendment (Protecting Australian Workers) Bill 2016 introduced by Labor into the Senate. That bill lapsed when Parliament was prorogued on 15 April 2016, and a Senate Inquiry into the bill by the Senate Standing Committee on Education and Employment also lapsed on 9 May 2016, when Parliament was dissolved by the Governor-General in preparation for the 2 July election.

Consequences. Whatever the eventual outcome of the 2 July Federal Election, the Labor Bill is due to be debated soon. If the Labor Party form government, they will presumably seek to implement the bill in its current form. On the other hand, the Policy released by Senator Cash on 19 May gives an indication of the key amendments that would likely form part of a Liberal bill. If the Liberal Party are able to form government, they would presumably seek to pass a bill that incorporates the key changes outlined in the Policy.

At the time of writing, the outcome of the 2 July election is not at all clear. It appears that whichever party forms government will be required to negotiate with the other major party and a whole host of other parliamentarians in the Senate and potentially also in the House. Ultimately both major parties have put forward a legislative package that shares a common objective and many common mechanisms and features. With popular support and bipartisan parliamentary support to introduce legislation on this topic, this bill might be the only industrial relations bill that is written into law in the next Parliament.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Adam Salter
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