In brief - The Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill (the Bill) introduced into Parliament on 9 December 2020 introduces a new criminal offence for dishonest and systematic wage underpayments aimed at better deterring non-compliance with the Fair Work Act.

Following the introduction of criminal sanctions for wage theft in Queensland earlier this year, Schedule 5 to the Bill introduces for the first time at the Federal Level, a criminal offence for dishonest and systematic wage underpayments.

The meaning of the phrase "dishonest" underpayments is broadly defined in the Bill, with an employer's conduct being considered dishonest when known by the employer to be dishonest "according to the standards of ordinary people".

In determining whether an employer has engaged in a "systematic pattern of underpaying one or more employee" the Courts may have regard to:

  • the number of underpayments (determined by whether employees were paid in full, in money and at least on a monthly basis);

  • the period over which the underpayments occurred;

  • the number of employees affected by the underpayments;

  • the employer’s response, or failure to respond, to any complaints made about the underpayments;

  • whether the employer failed to comply with its obligations concerning employee records relating to the underpayments; and

  • whether the employer failed to comply with its obligations concerning pay slips relating to the underpayments.

Under the Bill, the punishment for an employer found to have dishonestly engaged in systematic wage underpayments, or an individual involved in such a contravention is:

  • for an individual: imprisonment for four years or 5,000 penalty units, or both; or

  • for a body corporate: 25,000 penalty units.

This equates to a maximum penalty of $1,110,000 for individuals or $5,550,000 for corporations.

In addition, the Bill increases the range and value of civil penalties in relation to remuneration related contraventions including:

  • underpayment of wages, or other monetary entitlements;

  • unreasonable deductions from amounts owed to employees;

  • placing unreasonable requirements on employees to spend or pay amounts paid, or payable, to employees; or

  • the method or frequency of amounts payable to employees in relation to the performance of work.

In particular, and for the first time, in cases of serious remuneration related contravention, the penalties imposed on the offending employer can effectively include an account of the benefit derived by the employer equal to the amount of remuneration that employees would have received, retained or been entitled to if the contravention had not occurred. Increased financial penalties may also be applied.

Finally, the Bill proposed a number of administrative amendments to the powers of the Fair Work Commission (FWC) aimed at enabling the FWC to "deal with matters more expeditiously and [to] promote effective allocation of its resources". The proposed changes empower the FWC to:

  • deal with appeals without a formal hearing where appropriate;

  • more readily dismiss applications which the FWC considers are misconceived, lacking in substance or an abuse of the process of the FWC;

  • make orders about further applications by dismissed applicants (ie preventing potential applicants from making future claims in certain circumstances);

  • conciliate and/or arbitrate (by consent of the parties) smalls claims matters referred from the Federal Court of Australia and the Federal Circuit Court of Australia, with the small claims threshold increased from $20,000 to $50,000.

We will continue to provide updates on the implications of the proposed changes as the Bill passes through Parliament. If you would like specific advice on the implications of the changes for your business, please contact us.

To find out more about the changes proposed by the Bill please click here.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2021.