Tougher laws introduced for underpayments to staff

The Government last night introduced harsher penalties for employers who fail to keep wage records. Under this Bill, employers will face penalties by up to 10 times for a new category of “serious contraventions”.

The onus of proof has shifted – employers will be forced to prove they pay their staff correctly if they are investigated for underpayments. In addition, it is prohibited for employers to unreasonably require employees to make “cashback” payments.

Senior Employment Relations Adviser from Employsure Harry Hilliar says: “If an employer does not keep or provide correct payslips or accurate employee records and an employee makes an underpayment claim, the onus is on the employer to prove they have paid the employee correctly. Failure to keep compliant records may incur newly increased fines in addition to exposing a business to significant back payments.”

In a shake up for the franchise sector, franchisors will be held responsible for underpayments by their franchisees where they knew or should have reasonably known of the contraventions and failed to act to prevent the practices. This will apply where a franchisor has a degree of influence or control over their business networks.

“The Bill was passed with amendments from Labour but still gives the Fair Work Ombudsman questioning powers specifically for investigations into underpayments and exploitation with ‘proper oversight’.  We are interested to see how this plays out for employers and what is defined as proper oversight.”

“This Bill emphasises the importance that all employers take responsibility for their obligations under the Fair Work Act and for the impact of the economic decisions that they make.”