Higher fines for employers

By 13 September 2013News

Unless you have $50,000 in your bank account that you are happy to give to the Government, you cannot afford to breach workplace laws. Late last year (December 2012) the maximum fines for breaching a workplace law increased significantly to:

  • $51,000 for a company; and
  • $10,200 for an individual.

Given the complexity of workplace laws, you could be in breach without even knowing it. Many awards are long, complex and require you to make decisions on whether certain provisions, (e.g. allowances, penalty rates, classifications etc.) apply to an employee and in what circumstances.

Breaching the law can be as easy as not having a written employment agreement with each of your employees. Almost all awards require employers to ensure certain details are confirmed in writing at the beginning of an employment relationship.

Fines are not the only costs you will be exposed to if you breach a workplace law. Additional costs include:

  • the cost to rectify your breach (i.e. calculating and paying underpayments) – note Fair Work may require you to engage professionals to calculate the amount of any underpayment (it will not necessarily calculate it for you);
  • engaging professional advisers;
  • business interruption, lost time and opportunities.

The costs associated with defending and rectifying a breach, far outweigh the cost to put in place documents and systems to help you comply with the relevant workplace laws.

The table below details summarises recent fines issued to employers by the courts:

DateFineBreachComments
19/04/2013$166,848Sham contractingBy employing workers as independent contractors, when they were in fact employees, the employer breached numerous workplace laws and underpaid its workers by $82,475.12 (which it also had to rectify).
28/06/2013$66,000Underpayments totaling $101,934.37The employer paid its employees a flat rate for all hours worked, which resulted in them being paid less than their entitlements under the applicable award.
26/07/2013$286,704Sham contractingBy employing workers as independent contractors, when they were in fact employees, the employer breached numerous workplace laws and underpaid its workers by $26,082.22 (which it also had to rectify).

As you can see, employers have been heavily fined for breaches of workplace laws (especially in relation to sham contracting arrangements). If you engage contractors, particularly sole traders (with an ABN), we recommend you obtain advise as to whether a contractor arrangement is appropriate, or whether the arrangement ought to be one of employment.

If you have any questions or require assistance in relation with any workplace queries please call Matt Bell in our Business and Employment Law section on (07)4616 9898.