By Fay Calderone (Partner) and Mei-Lim Smith (Associate) of DibbsBarker
What you need to know
- Several key changes will affect Australian workplaces this year, including the commencement of the mandatory data breach notification regime and the replacement of the 457 visa program.
- Other employee and industrial relations issues that are likely to impact Australian businesses throughout 2018 include increased penalties for the underpayment of workers and poor record-keeping, as well as the Fair Work Ombudsman’s continued focus on independent contracting arrangements and accessorial liability for workplace law contraventions.
- All business leaders and people managers should assess how the management of their employee and industrial relations will be impacted by these issues and the changes on the horizon.
Refer to CCH Books’ new Employment & WHS Collection 2018 for more detailed guidance and insights.
Key changes to consider in 2018
Mandatory data breach reporting obligations
From 22 February 2018, businesses subject to the new mandatory data breach notification regime will face penalties of up to $1.8 million if they fail to report data breaches in circumstances where serious harm could occur to an individual whose data has been compromised. These reforms are particularly timely in the wake of recent data breaches affecting Uber and the Australian Red Cross. They highlight the need for all businesses to establish clear data security policies to manage the risk of, and response to, external attacks and internal data breaches arising from the negligent or malicious acts of staff. Click here to read our previous update on the scope of the mandatory data breach reporting obligations and the measures which can be implemented to respond to these changes.
Replacement of the 457 visa program
From March 2018, the 457 visa will be abolished and replaced with the new Temporary Skills Shortage (TSS) visa. The TSS will be comprised of a short term stream of up to two years and a medium term stream of up to four years. It will impose more onerous requirements than the current 457 program, including a requirement for visa applicants to have at least two years’ work experience in their skilled occupation. Employers will also need to pass a new non-discriminatory workforce test to ensure they are not actively discriminating against Australian workers. While new 457 visas will no longer be processed, existing 457 visas will continue to remain in effect.
Direct liability of franchisors and parent companies for underpayments
Franchisors and parent companies can now be held directly liable for the underpayments of their franchisees and subsidiaries where they knew or should have reasonably known of the contraventions and failed to take reasonable steps to prevent them. As outlined in our recent article on these reforms, which you can read here, the new offences will capture franchisors and parent companies who have a significant degree of influence or control over their business networks and who fail to take reasonable steps to prevent non-compliance.
Higher penalties for ‘serious contraventions’ and poor record keeping
Following the introduction of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017, significantly higher penalties of up to $630,000 for companies and $126,000 for individuals can now be imposed for ‘serious contraventions’ of the Fair Work Act, including repeat instances of underpayment. The maximum penalties that can be imposed on employers who fail to keep proper records have also doubled to $63,000 for companies and $12,600 for individuals. In light of these changes, it is more important than ever for businesses to review their payroll and record keeping practices to ensure that workers are being paid correctly and the required employment records are being retained for a period of seven years.
Key issues to watch out for in 2018
FWO will continue to target managers and advisors who are involved in workplace law contraventions
As the Fair Work Ombudsman (FWO) continues to target all individuals involved in the exploitation of workers, managers and those in advisory positions must consider whether their work could facilitate a breach of the Fair Work Act, and if in doubt, seek advice.
In a case which confirms that simply following the directions of senior management is no excuse, a HR manager was personally fined $21,760 for her involvement in the underpayment of workers and the creation of false and misleading employee records. The HR manager was liable as an accessory even though she had brought her concerns about the underpayment of wages to her employer’s attention and had maintained that she was following the directions of management to create false time and wages records. The Court held that these factors did not reduce the manager’s liability, finding that ‘there is nothing wrong with sending the message that an employee should indeed resign if that is the only alternative to continuing to participate knowingly in illegal activity’.
In-house counsel and third party business advisors such as accountants, HR consultants and payroll providers should also be alert following the FWO’s prosecution of two accounting firms for their role in the underpayment of wages by a client. In a landmark case, the FWO fined an accounting firm $53,880 for its involvement in its client’s breach of workplace laws as it had failed to make reasonable inquires to ensure its client was paying the correct award rates to its employee (click here to read our previous update about this case). In a subsequent decision, a sushi chain and its accountant were fined nearly $200,000 for their involvement in an internship program that resulted in the underpayment of overseas workers. The company’s accountant was personally fined $4,608 for preparing false records which were submitted to the FWO during its investigation. The FWO has since put all advisors on notice that it will continue to prosecute not only ‘culpable in-house managers at businesses that exploit their employees, but also external advisers who facilitate the underpayment of workers’.
Spotlight on sexual harassment
The spotlight on sexual harassment has never been brighter than it is now, in the wake of recent scandals and the traction of movements like #MeToo. All businesses should put proactive measures in place to reduce the likelihood of sexual harassment occurring within their workplaces, and minimise the risk of adverse claims. There are many reasons why business leaders should be putting the management of sexual harassment on the agenda, including the fact that there are multiple legal avenues available to employees to bring a claim, and the reputational risks and costs to business associated with these claims have dramatically increased in recent years.
To take just one example, an employee was recently awarded over $333,000 in damages after being subject to unwanted sexual advances by her manager. As employers can avoid liability by demonstrating that they took all reasonable steps to prevent harassment from occurring, businesses should be reviewing their approach to this issue by ensuring they have sufficient policies and training in place as well as processes to monitor and enforce compliance.
Focus on independent contracting arrangements
The misclassification of workers as contractors will be on the FWO’s radar as it continues to investigate companies for sham contracting, as it has recently done with Uber.
The FWO’s investigation into whether Uber’s drivers should be classified as employees rather than contractors comes in the wake of a recent Fair Work Commission ruling which held that an Uber driver was not allowed to pursue an unfair dismissal claim because he was not employed by the ride sharing platform. However, as the driver was unrepresented and Uber’s evidence went largely unchallenged, the classification of workers in the gig economy is far from settled. Of particular significance is the recognition in this decision that current laws may need to change to provide greater protections for independent contractors. These sentiments come on back of a report handed down by the Senate Education and Employment References Committee in September 2017, which recommended that new laws be introduced to extend minimum employment entitlements to all workers, including independent contractors. Whether the Federal Government will act on these recommendations is yet to be seen. What is clear is that there will be continuing and increasing scrutiny on the engagement and entitlements of contractors and businesses will need to ensure that their arrangements with independent contractors are genuine.
Be prepared to take action
It is clear that all businesses will be affected by these changes and developments in some way.
This article first appeared on the DibbsBarker website and has been reproduced with permission.
1. Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown  FCA 1301
2. Fair Work Ombudsman v Blue Impression Pty Ltd & Ors  FCCA 810 (28 April 2017)
3. Fair Work Ombudsman v Kjoo Pty Ltd & Ors  FCCA 3160
4. Comments made by the Acting Fair Work Ombudsman, Kristen Hannah on 18 November 2017. See https://www.fairwork.gov.au/about-us/news-and-media-releases/2017-media-releases/november-2017/20171118-blue-impression-ezy-accounting-penalty.
5. Collins v Smith  VCAT 1992
6. Mr Michail Kaseris v Rasier Pacific V.O.F  FWC 6610
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