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Fair Work Amendment (Protecting Australian Workers) Bill 2016

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2013-2014-2015-2016

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

SENATE

 

 

 

 

 

FAIR WORK AMENDMENT (PROTECTING AUSTRALIAN WORKERS) BILL 2016

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

(Circulated by authority of Senator the Hon. Cameron)



FAIR WORK AMENDMENT (PROTECTING AUSTRALIAN WORKERS) BILL 2016

 

OUTLINE

 

The purpose of the Fair Work Amendment (Protecting Australian Workers) Bill 2016 is to amend the Fair Work Act 2009 to provide increased protections for vulnerable employees against unlawful conduct on the part of employers by creating new criminal offences and increased civil penalties for certain breaches of the Fair Work Act 2009 .

 

The main provisions of the Bill will:

 

·          make it clear that the Fair Work Act 2009 applies to all employees irrespective of their status under the Migration Act 1958 ;

·          require the FWO to publish a Fair Work Information Statement containing information for employees about their rights under the Fair Work Act 2009 , the relationship between workplace laws and the Migration Act 1958 and the right of overseas workers to seek redress for contraventions of workplace laws;

·          provide additional protection from adverse action taken against an employee who questions whether a workplace right exists or whether they are an employee and not an independent contractor;

·           introduce a “reasonable person” test in determining whether an employer has engaged in sham contracting;

·          give the Court the power to make orders requiring directors of phoenix companies to pay unpaid wages and other employee entitlements when a company of which they are a director is phoenixed;

·          increase the maximum penalties available for certain breaches of the Fair Work Act 2009 in circumstances where the size of a business, the sophistication of its management systems and its existing statutory duties in respect of its conduct should mitigate against the breaches occurring;

·          give the Court the power to make an order disqualifying a person from managing a corporation (within the meaning of the Corporations Act 2001 ) for a certain period in relation to certain civil contraventions of the Fair Work Act 2009 if the Court is satisfied that disqualification is justified; and

·          introduce new criminal offences carrying penalties of imprisonment for two years or 240 penalty units or both for conduct that involves the use of coercion or threat within the meaning of Division 270 (slavery and slavery-like conditions) of the Criminal Code in relation to certain provisions of the Fair Work Act 2009 or in relation to a temporary overseas worker.

 

NOTES ON CLAUSES

 

In these notes on clauses, the following abbreviations are used:

ABCC

Australian Building and Construction Commission

ASIC

Australian Securities and Investment Commission

FW Act

Fair Work Act 2009

FW(RO) Act

Fair Work (Registered Organisations) Act 2009

FWC

Fair Work Commission

FWIS

Fair Work Information Statement

FWO

Fair Work Ombudsman

ICA

Independent Contractors Act 2006

NES

National Employment Standards

PC Inquiry

Productivity Commission Inquiry into the Workplace Relations Framework.

 

Clause 1 - Short title

1.                         This is a formal provision specifying the short title of the Act when enacted. 

Clause 2 - Commencement 

2.                         The table in this clause sets out that the provisions of the Bill will commence on the day after the Act receives the Royal Assent. 

Clause 3 - Schedule(s)

3.                         Each Act specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule. Any other item in a Schedule to this Act has effect to its terms. 



Schedule 1 - Main amendments

Fair Work Act 2009

Item 1 - After subsection 7(2)

4.                         Item 1 is consequential to the amendment made in Item 22.

Item 2 - Section 12

5.                         Item 2 inserts definitions for disqualification order , executive officer, phoenixing compensation order , pre-liquidation name .

6.                         Item 2 also defines a temporary overseas worker as the holder of a temporary visa that allows the performance of work in accordance with the visa. This includes people on temporary skilled migrant visas (457), working holiday maker visas (417 and 462), and student visas.

Item 3 - At the end of Division 3 of Part 1-2

New Section 15A - Effect of migration laws

7.                         Item 3 introduces section 15A, which clarifies that the Fair Work Act 2009 applies to all workers, irrespective of their immigration status.

8.                         In their Workplace Relations Inquiry, the Productivity Commission concluded that “making clear the Fair Work Act applies to migrants that breach their visa conditions… should motivate more migrants to report their employer, and reduce instances of exploitation” [1] .

9.                         The FWO enforces the FW Act for all workers, including migrants working in breach of their visa conditions, and has recovered payments for some of those workers. In the case of Smallwood vs Ergo Ltd [2] , however, the FWC found that a visa holder did not have an employment contract that was enforceable. The FWO has also indicated that it would be beneficial if the position was made clear.

Items 4 and 5 - Subsections 124(2) and 124(3)

10.                     Section 124 requires the FWO to publish a FWIS that contains information about inter alia the NES, Awards, agreement making under the FW Act, the right to freedom of association and the role of the FWC and the FWO.

11.                     Item 4 requires the FWIS to also include information prescribed in the regulations about:

·          the relationship between workplace laws and the Migration Act 1958 ; and

·          opportunities for redress for temporary overseas workers affected by contraventions of workplace laws.

 

12.                      Workplace laws is defined in the FW Act as including the FW Act, the FW(RO) Act, the ICA or any other Commonwealth, State or Territory law that regulates the relationships between employers and employees.

13.                     Item 4 deals with the same problem identified by the FWO and the Productivity Commission referred to in Item 3. It makes clear that everyone has rights under the FWA, irrespective of their migration status, which is anticipated to result in the increased reporting of exploitation and reduced prevalence.

14.                     Item 4 also ensures that material is produced in relevant languages, in recognition that there are no English language requirements for some temporary visa workers, for example people on subclass 417 working holiday visas.

15.                     Item 5 is consequential to the amendment made in Item 4.

Item 6 - After subsection 125(1)

16.                     Section 125 presently requires an employer to provide an employee with the FWIS when the employee commences.

17.                     Item 6 ensures that the FWIS is provided to an employee in a language in which they are proficient.

Item 7 - Subsection 167(3)

18.                     Item 7 is consequential to the amendments made in Items 14 and 18.

Item 8 - Subsection 298(2)

19.                     Item 8 is consequential to the amendment made in Items 14 and 18.

Item 9 - At the end of section 340

20.                     Section 340 deals with protection from adverse action. The new subsection 340(3) specifies that a person must not take adverse action against another person because that person questions whether a workplace right (defined in section 341) exists. The questions may be asked on the person’s own behalf or on the behalf of another person.

21.                     Item 9 will ensure that adverse action cannot be taken if a worker asks whether someone is an employee not an independent contractor.

22.                     Subsection 340(3) is a civil remedy provision, punishable by a maximum penalty of 60 penalty units. This is the same penalty that currently exists for subsections 340(1) and 340(2).



 

Item 10 - Subsection 357(2)

23.                     Section 357 is a civil remedy provision dealing with the misrepresentation of employment as independent contracting, also known as sham contracting . Subsection 357(2) currently provides that an employer is not involved in sham contracting if s/he didn’t know and wasn’t reckless as to whether the contract was a contract of employment rather than a contract for services.

24.                     The replacement subsection 357(2) introduces an objective test such that an employer is not involved in sham contacting if they believed the contract was a contract for services and a reasonable person would have believed the contract was a contract for services.

25.                     This provision gives effect to recommendation 25.1 of the PC Inquiry [3] , as well as the Sham Contracting Inquiry Report by the ABCC in 2011 [4] and the 2012 post-implementation review of the FW Act [5] .

  Item 11 - Subsection 539(2)

26.                     Item 11 is consequential to the amendment made in Item 16.

Item 12 - Subsection 539(2) (table item 11, column 1)

27.                     Item 12 is consequential to the amendment made in Item 9.

Item 13 - Subsections 545(1), (3) and (3A) (note 1)

28.                     Item 13 is consequential to the amendments made in Items 14 and 18.

Item 14 - After section 545

New section 545A - Orders requiring directors of phoenix companies to pay amounts owed by failed companies

29.                     Item 14 inserts new section 545A.

30.                     The new section 545A gives effect to Labor’s commitment to hold executive officers responsible for the non-payment of wages, when a company with which they are associated is phoenixed.

31.                     This is consistent with provisions introduced when Labor was last in Government that allowed the Tax Office to hold directors personally liable for unpaid superannuation guarantee contributions.

32.                     The court may make a phoenix compensation order where:

·          there has been a contravention of the FW Act involving an underpayment of wages; and

·          the company is wound up and the underpayment has not been redressed; and

·          the executive officer becomes executive officer of a phoenix company within 12 months after the failed company was wound up; and

·          the phoenix company uses assets used by the failed company.

 

This reflects the ASIC definition of phoenixing. 

33.                     The executive officer will not be held liable if the phoenix company pays the compensation.

34.                     Subsection 545A(2) defines an executive officer as a person who is concerned in or takes part in the management of the company, whether or not they are a director. This will allow compensation orders to be sought from persons who use a shadow director or figurehead.

35.                     Subsection 545A(3) states that in determining the amount payable under the order the court is required to take into account in making the order the combined effect of all orders made under the section so that the whole of the underpayment is paid.

36.                     Subsection 545A(4) outlines when orders may be made and states that the court may make an order on its own initiative or on application.

37.                     Subsection 545A(5) states the court may exempt an executive officer from liability if they have acted honestly, and they ought fairly be exempt. In deciding whether to exempt someone from liability the court is required to take account of a range of matters set out in subsection 545(6)that relate to the indicia of phoenixing.

38.                     Subsection 545A(7), provides that pre-liquidation name of a company means any name the company was known by in the 12 months preceding liquidation. This is relevant to the indicia of phoenixing in subsection 545(6).

39.                     Subsection 545A(9) provides that a time limit of 6 years applies to the recovery of underpayments. This is the same time limit that applies to orders that can be made under existing section 545.

40.                     Subsection 545A(10) states that the use of phoenixing compensation order does not limit the use of orders under section 525, pecuniary penalty orders, or disqualification orders.

Item 15 - Subsection 546(2)

41.                     Item 15 is consequential to the amendment made in Item 16.

Item 16 - After subsection 546(2)

42.                     Item 16 introduces a new maximum penalty for certain breaches of the FW Act.

43.                     New subsection 546(2A) relates to breaches that contravene one of:

·          the National Employment Standards (section 44);

·          a Modern Award (section 45);

·          an Enterprise Agreement (section 50);

·          a Workplace Determination (section 280);

·          a National Minimum Wage Order (section 293);

·          an Equal Remuneration Order (section 305);

·          the requirements related to the method and frequency of payments (section 323); or

·          sham contracting (section 357).

44.                     The higher penalty will only apply to companies which could be expected to have a level of human resources sophistication; and which already have statutory duties in relation to their behaviour. The higher penalty will not apply to small businesses.

45.                     It is expected that consistent with standard practice, where breach of the sham contracting provision also constituted a breach of one or more provisions relating to underpayment, that in sentencing, the court would look at the totality of the conduct, and determine a civil penalty that reflects the conduct as a whole.

Item 17 - Subsection 546(5)

46.                     Item 17 is consequential to the amendments made in Items 14 and 18.

Item 18 - After section 546

New section 546A - Orders disqualifying persons from managing corporations

47.                     Item 18 inserts new section 546A.

48.                     The courts have the power under the Corporations Act 2001 to disqualify people from managing corporations for a certain period in relation to contraventions of certain civil penalty provisions, if the court is satisfied the disqualification is justified.

49.                     The new section 546A allows the court to disqualify a person from managing corporations for a certain time for certain breaches of the FW Act, if the court is satisfied the disqualification is justified. The disqualification provisions relate to breaches by corporations which contravene the following provisions:

·          the National Employment Standards (section 44);

·          a Modern Award (section 45);

·          an Enterprise Agreement (section 50);

·          a Workplace Determination (section 280);

·          a National Minimum Wage Order (section 293);

·          an Equal Remuneration Order (section 305);

·          the requirements related to the method and frequency of payments (section 323); or

·          sham contracting (section 357).

50.                     Under new subsection 546A(2), the court must take into account the same matters as it does for disqualification under the Corporations Act 2001 in determining whether a disqualification order is justified. That is the person’s conduct in managing the business and any other matters the court considers appropriate.

51.                     Subsection 546A(3) states that the applicant for the order must notify ASIC of the order so that it can update the register of disqualified persons. 

52.                     Subsection 546A(4) provides that the use of a disqualification order does not limit the use of orders under section 545, pecuniary penalty orders, or phoenixing compensation orders.

Item 19 - Paragraph 548(1)(a)

53.                     Item 19 is consequential to the amendments made in Item 18.

Item 20 - At the end of section 549

54.                     Item 20 is consequential to the amendments made in Item 22.

Item 21 - Subsection 558(2)

55.                     Item 21 is consequential to the amendments made in Item 16.

Item 22 - After Part 4-1

Part 4-1A - Offences for serious contraventions of this Act

56.                     Item 22 introduces a new Part 4-1A into the FW Act.  New Part 4-1A sets out new offences for serious contraventions of the Fair Work Act relating to underpayments to employees, sham contracting and the treatment of temporary visa workers.

(a)     Section 559B provides that for the purposes of new Part 4-1A the terms 'employee' and 'employer' are to have their ordinary meaning;

(b)    Section 559C introduces two new criminal offences punishable by imprisonment for 2 years or 240 penalty units, or both. The new offence relates to certain breaches of the Fair Work Act 2009 that involve coercion or a threat within the meaning of the slavery and slavery-like conditions provisions of the Criminal Code ;

                                i.             Subsection 559C(1) provides that a person commits an offence if the person engaged in conduct that contravenes one of the following provisions and the contravention involves the use of coercion or a threat:

·          the National Employment Standards (section 44);

·          a Modern Award (section 45);

·          an Enterprise Agreement (section 50);

·          a Workplace Determination (section 280);

·          a National Minimum Wage Order (section 293);

·          an Equal Remuneration Order (section 305);

·          the requirements related to the method and frequency of payments (section 323); or

·          sham contracting (section 357).

                              ii.             Subsection 559C(2) provides that a person commits an offence if the person engages in conduct that contravenes a civil remedy provision under the FW Act and the contravention involves coercion or a threat in relation to a temporary overseas worker.  This offence is intended to penalise conduct which is serious, but which falls short of existing offences relating to forced labour, servitude and the like. 

(c)     Section 559D makes clear that the offences in 559C are not made out if the only reason for the contravention relates to the retrospective application of an instrument made under the FW Act.

(d)    Section 559E makes clear that it is not a defence in a proceeding for an offence against section 559C that the person who has been victimised consented to, or acquiesced in, the conduct constituting any element of the offence.

(e)     Section 559F makes clear that this Part does not exclude or limit the operation of any other laws.



 



Schedule 2 - Consequential Amendments

Corporations Act 2001

Item 1 - After section 206EB

57.                     Item 1 is consequential to the amendment made in Schedule 1, Item 18.

Item 2 - After section 206GA

58.                     Item 2 introduces a new section 206GB that is consequential to the amendment made in Schedule 1, Item 18.

59.                     The new section 206GB provides for any applicant for a disqualification order made under 546A to be notified in the event that a person who is disqualified under that section seeks leave to manage a corporation, despite the disqualification.

Item 3 - Paragraph 1274AA(1)(a)

60.                     Item 3 is consequential to the amendment made in Item 1.

Item 4 - After paragraph 1274AA(2)(ac)

61.                     Item 4 is consequential to the amendment made in Item 1.

 



 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Fair Work Amendment (Protecting Australian Workers) Bill 2016

 

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

 

Overview of the Bill

The purpose of the Fair Work Amendment (Protecting Australian Workers) Bill 2016 is to amend the Fair Work Act 2009 to provide increased protections for employees against unlawful conduct on the part of employers by creating new criminal offences and increased civil penalties for unlawful conduct on the part of employers.

 

The Bill is needed to deter unlawful conduct and serious contraventions of the Fair Work Act 2009 by employers by providing for increased civil penalties, creating new criminal offences and other sanctions for companies and company directors who engage in unlawful conduct.

 

 

Human rights implications

 

The Bill promotes the right to just and favourable conditions of work contained in article 7 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).

 

Article 7 recognises “the right of everyone to the enjoyment of just and favourable conditions of work”. The Bill protects the enjoyment of just and favourable conditions of work by proposing penalties that will deter employment of workers on conditions less favourable than the National Employment Standards, Awards, and other employment agreements (Item 16).

 

The Bill also furthers the rights in Article 7 by ensuring an effective remedy for all, irrespective of their migration status (Item 3).

 

The proposed new offences and penalty provisions (Item 16 and 22) are consistent with the right to a fair trial and fair hearing (article 14(1)), the presumption of innocence (article 14(2)), the right against self-incrimination (article 14(3)(g)), the right to have a sentence reviewed by a higher tribunal (article 14(5)), the right not to be tried or punished twice for the same offence (article 14(7)), the guarantee against retrospective criminal laws (article 15(1)) and the right not to be arbitrarily detained (article 9(1)) of the International Covenant on Civil and Political Rights (ICCPR).

 

In item 10 of the Bill the employer has to prove matters in the existing defence, which is being maintained. This is appropriate in the circumstances as it goes peculiarly to the knowledge of the employment.

 

The civil penalty provisions proposed (Item 16) do not apply to the public in general, rather corporations and individuals associated with corporations that are subject to the Fair Work Act 2009 . The civil penalty provisions proposed are consistent with those that already apply to corporations and directors of corporations, for example in relation to breach of directors’ duties.

 

Conclusion

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 but to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate.

 

 

 

Senator the Hon. Cameron

 




[1] Productivity Commission 2015, Workplace Relations Framework , Final Report, Canberra, p. 930

[2] [2014] FWC 964

[3] Productivity Commission, op cit ., p. 815

[4] ABCC 2011, Sham Contracting Inquiry Report , Melbourne

[5] Department of Education, Employment and Training 2012, Towards more productive and equitable workplaces: An evaluation of the Fair Work legislation , Canberra