Strong support for tough new FWO powers

Strong support for tough new FWO powers
By Jim Wilson on 11 May 2017 Proposals for tough new powers for the Fair Work Ombudsman to tackle widespread wage fraud have received strong support from a Senate committee.

The Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 was supported by the Coalition, the Labor Party and the Greens in the Senate Education and Employment Legislation Committee.

Shocking exploitation


According to the committee, the bill would 
  • introduce higher penalties for payment-related workplace laws
  • increase penalties for record-keeping failures
  • make franchisors and holding companies responsible for underpayments by their franchisees or subsidiaries where they knew or ought to have reasonably known of the contraventions and failed to take reasonable steps to prevent them
  • expressly prohibit employers from unreasonably requiring their employees to make payments (e.g. demanding a proportion of their wages be paid back in cash), and
  • strengthen the evidence-gathering powers of the Fair Work Ombudsman (FWO).
“The proposed amendments aim to more effectively deter unlawful practices that involve the deliberate and systematic exploitation of workers,” the majority LNP Senate committee report notes. 

“The Senate Education and Employment References Committee's inquiry into the impact of temporary work visa programs highlighted shocking instances of exploitation. The report found that such unscrupulous behaviour not only had a detrimental impact on the workers themselves, but also negatively impacted on Australia's labour markets, placing downward pressure on the wages and conditions of workers and undercutting the majority of legitimate employers that abide by Australian workplace laws,” the majority report noted. 

The committee said that “high-profile” cases had identified the Fair Work Act was insufficient to deal with the exploitation of vulnerable workers and needed to be strengthened.

It added that the bill as currently drafted addressed the need to protect vulnerable workers and punish those who “deliberately and systematically” break the law. 

Accessorial liability


A key reform is the expansion of the s550 accessorial liability provisions which enable individuals (directors and HR managers, for example) and third parties to be held liable for wage frauds. 

The expansion of s550 will enable courts to hold franchisors liable if they have “a significant degree of influence or control” over the franchisee. However, they cannot be held liable if they have taken “reasonable steps” to prevent breaches from occurring.  

The committee noted arguments from the business community that expansion of the accessorial liability provisions could damage franchisor-led international investment in Australia and/or domestic franchisor investment in Australian jobs. 

It was found by the committee that the accessorial liability provisions of the Fair Work Act should be boosted but it also argued that the wording in the current draft (which can still be changed) is too broad and should be scaled back. 

Enhanced powers for the Ombudsman


Another major part of the bill concerns enhanced powers to be given to the Fair Work Ombudsman.

These include boosting the FWO’s ability to gather evidence and to deter people from hindering or obstructing FWO inspectors. These would include powers to compel the production of documents and answers from witnesses. 

Opposition to the granting of coercive investigation powers was strong among the business community. However, the committee noted that there were a variety of safeguards in the bill including the need for reasonable grounds, the right to legal representation and the prohibition on the use of self-incriminating evidence. 

The committee said it was “satisfied” the FWO would only use the expanded powers as a last resort and only for “the most difficult and complex cases”.

Cross-bench support


The Australian Labor Party senators and the Greens senator both supported the bill with the proviso they both thought the bill did not do enough to protect vulnerable workers. 

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