The Australian Parliament is currently considering a bill that aims to introduce significant changes in how ‘wage theft’ – the deliberate underpayment of wages – is handled. This proposed legislation is especially relevant for small and micro business owners who must navigate these changes carefully.
Key Points of the Proposed Legislation:
- Criminal Offence for Intentional Wage Underpayment:
- The bill proposes making intentional wage underpayment a criminal offence.
- Individuals found guilty could face up to 10 years in prison.
- Fines for underpayment will be substantial: up to $1,565,000 for individuals and $7,825,000 for businesses.
- Protection Against Unintentional Mistakes:
- Importantly, the reforms are designed to distinguish between intentional and accidental underpayments.
- A ‘safe harbour’ provision will be introduced for small businesses to protect against penalties for unintentional errors.
- Broader Implications of the Bill:
- Definition of ‘casual employee’ will be revised, creating clearer pathways to permanent employment.
- The test for ‘sham contracting’ will shift from ‘recklessness’ to ‘reasonableness’.
- The Fair Work Commission will receive enhanced powers, including setting minimum standards for gig economy workers.
- The bill introduces ‘industrial manslaughter’ as a new offence in the Work Health and Safety Act 2011.
- Reporting and Review Timeline:
- The Senate Education and Employment Legislation Committee is reviewing the bill, with a report due in February 2024.
- State vs Federal Legislation:
- States such as Queensland, South Australia, and Victoria already have laws against wage theft. The interaction between these state laws and the proposed federal legislation is yet to be clarified.
- Recent Enforcement Efforts:
- Over the past two years, the Fair Work Ombudsman has recovered over $1 billion in back-payments, mainly from large corporations and universities. Additionally, court-ordered penalties amounting to $6.4 million have been imposed on employers during this period.
What This Means for Small and Micro Businesses:
If you own a small or micro business, staying informed and compliant with these changes is crucial. While the legislation primarily targets intentional wage underpayment, understanding the distinction and ensuring your payroll systems are accurate is key to avoiding potential penalties.
Keep abreast of these developments and consider consulting with a legal or HR expert to ensure your business practices align with these new legal standards. This is not just about compliance; it’s about fair treatment of your employees, which is fundamental to the success of any business.