Franchisors as well as employers may now be liable for significantly increased penalties for exploitation of vulnerable workers

The Federal Government passed legislation this week which has significantly increased penalties for breaches of the minimum wage entitlements under the Fair Work Act. As an example, financial penalties for serious contraventions are now as much as $630,000 for a corporation and $126,000 for an individual, while the maximum penalties for record keeping and pay slip breaches will be $63,000 for a corporation and $12,600 for an individual, for each contravention.

The Act also now makes certain franchisors and holding companies responsible for underpayments by their franchisees or subsidiaries if it can be shown that they either knew, or reasonably ought to have known, about the contraventions and failed to take reasonable steps to prevent them. Further, employers who do not meet record keeping or pay slip obligations will need to show a reasonable excuse to be able to disprove wage claims in Court.

These penalties will significantly change the way these matters are prosecuted, primarily by the Fair Work Ombudsman. It is vital that employers, and particularly franchisors, review their operation and procedures, to ensure that they do not become liable for these significantly enhanced penalties.

We have significant experience in advising on employment law. If you require any further information, please contact Geoff Lloyd at our Camden office on 02 4651 4800.