Lawyer points to low threshold of tolerance in ‘wage theft’ era
KHQ Lawyers special counsel Michael Cochrane uses recent examples of transport firms under Fair Work Ombudsman (FWO) scrutiny to remind operators to ensure their payment systems are compliant.
In the current ‘wage theft’ climate, Cochrane tells the Victorian Transport Association’s (VTA’s) annual conference, there is “no sympathy for employers, regardless of the reason”.
Inadvertent payment issues can include:
- payroll coding errors and administration oversight
- misclassified employees
- the application of an incorrect award or classification
- failure to recognise the award coverage.
More nefarious activities involve intentional exploitation, systematic underpayment, a high level of knowledge of wrongdoing, sham contracting, low flat rates, and turning a blind eye to offences.
Under the Fair Work Amendment Act 2017, a new ‘serious contravention’ offence exists for employers, with a reverse onus on employers to maintain records and produce them for inspection, Cochrane notes.
Higher penalties apply for failing to keep records, with increased scrutiny on franchisors or holding companies with significant control over franchisees and subsidiaries.
Further, ‘accessorial liability’ also means those aware of contraventions, or ‘knowingly concerned’, can still be held liable.
Cochrane advises records must be kept for seven years, be legible, in clear English, and accessible to inspectors.
Depending on employment circumstances, they must contain details such as name, employment commencement date, status, pay, hours (including irregular and overtime work), individual flexibility arrangement (IFA), and guarantee of annual earnings.
The FWO has the authority to hold investigations and inquiries, enter premises, issue compliance notices, infringement notices (on the spot fines or notices to produce documents; produce enforceable undertakings or contravention letters.
Read lawyer Ben Sewell’s plea for balance on wage compliance issues, here
Penalties of $12,600 per contravention per individual, and $63,000 per company, apply. Those can be multiplied by 10 for ‘serious contraventions’ such as systematic conduct.
Last year, the FWO held 23 separate litigations, with $4.5 million in court ordered penalties.
Two key cases in road transport Cochrane spotlights are CouriersPlease (2019) and Atkins Freight (2016). More recently, FWO has commenced proceedings against Gold Coast operator Trucking Services, and Boske.
Cochrane’s advice to operators includes:
- get your decisions right upfront – be clear on what award/agreement employees are covered by and your subsequent obligations
- monitor compliance regularly with internal audits, and external audits if necessary
- develop a back-up record-keeping suite – don’t just rely on software
- if errors have been made, be prepared to remedy them immediately
- stay on top of changes to awards and legislation.
Owner-driver law
Meanwhile, Victorian Small Business Commissioner (VSBC) Judy O’Connell reveals 23 applications were made under the state’s Owner Driver and Forestry Contractor Act in 2018-19, with seven of those going to mediation and an 85 per cent successful resolution rate.
Key issues related to termination without minimum notice under section 21 of the act – three months for an owner driver of a heavy vehicle – along with termination due to serious or wilful misconduct (so as to void minimum notice requirements), along with contractual disputes about agreed rates and unpaid monies.
Cases have heard dispute over values as low as $500 to more than $250,000, with the average around $20,000-30,000.
O’Connell reminds businesses of changes to the ODFC act that come into effect on May 1, which include:
- amending definitions to clarify contractors employed via third-party contracting platforms like Uber Eats are covered
- amend dispute resolution procedure to allow the VSBC to arrange mediation or arbitration
- establish a compliance and enforcement framework
- requirement to pay owner drivers within 30 days of receiving invoice.