Trust It, Use It, Prove It – New law requires employers to disprove underpayment allegations

Loophole closed

Recent amendments to the Fair Work Act 2009 (Cth) have closed a loophole used by employers in underpayment proceedings against the FWO. Previously, employers were able to avoid litigation with via a loophole where due to their lack of record keeping, the FWO could not present sufficient evidence in court to prove underpayments or breaches made by the employer.

Under the new law which applies to conduct occurring from 15 September 2017, employers are now required to disprove underpayment allegations in instances where they have not met record keeping or pay slip obligations. This means even if an employer does not keep records, they must still prove to the court that they were meeting their obligations in accordance with the law.

Employer facing legal action under new law

The Fair Work Ombudsman (FWO) has commenced its first legal proceedings adopting the new law against A & K Property Services and the Company’s directors. The FWO has alleged that a sushi operator and its directors breached workplace laws by failing to keep time and wage records and issue payslips to employees. It is also further alleged that the Company underpaid employees their minimum wages, penalties and loadings under the Fast Food Industry Award 2010.
If the allegations are found to be true, the Company faces penalties of up to $63,000 per breach and the directors face penalties of up to $12,600 per breach for their involvement in the contraventions.

What does this mean for employers?

• As always, it is a good time to make sure that you are paying the minimum wage rates and entitlements for all of your employees. These may be contained in a Federal Modern Award for Award-covered employees, or in the National Employment Standard for Award-free employees. Either way, this case makes it very clear that the onus is on employers to show evidence that they comply;
• This case also brings top of mind that it is not only the business but individuals too, that can be held personally liable for any breaches under the Fair Work Act 2009 (Cth). This is commonly the case for matters relating to underpayment and other breaches of a Modern Award, Enterprise Agreement or the National Employment Standards.
• There are a number of obligations on an employer to comply with the law with respect to paying employees, keeping appropriate records and issuing payslips to employees. This can be complicated and if an employer fails to comply, there can be serious consequences.
• Employers are strongly advised to seek advice if they believe they may not be paying the correct rate, are not keeping appropriate records or are not issuing payslips to their employees.

Our Seed HR Hub offers resources to employers to assist with Award and legislative compliance, record keeping requirements and payslip information. Click Here to sign up today!

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