The Federal Government’s amendment to the Fair Work Act through the Protecting Vulnerable Workers Act 2017, now requires employers disprove wage claims made in a court if they don’t meet their record-keeping or pay slip obligations and cannot give a reasonable excuse.
Previously the onus would have been on the employee & the Fair Work Ombudsman to prove the allegations against the employer.
This is referred to as a ‘reverse onus of proof’. The change in the law is now getting its first workout in Court. Potentially it has wide-reaching implications for businesses across the country.
The Fair Work Ombudsman has commenced their first case using the new laws against a sushi fast food operator in Brisbane.
As part of their auditing activity, Fair Work Inspectors discovered that, between October and December 2017, the business allegedly breached workplace laws by failing to keep proper time and wages records and failed to issue pay slips to employees. The FWO is also alleging that the business underpaid nine workers across two outlets a total of $19,467 in entitlements.
The workers, who were all South Korean nationals in their early 20s and 30s were in Australia on working holiday, student and vocational education visas. The FWO alleges that they were not provided with their superannuation, annual leave and personal leave entitlements.
The FWO said that employers have been able to exploit a loophole to avoid prosecution because of their failure to keep wage and other records.
Acting Fair Work Ombudsman Kristen Hannah said that “businesses who don’t meet record-keeping or pay slip obligations and can’t give a reasonable excuse need to disprove allegations of underpayments in Court.”
The business faces penalties of up to $63,000 per contravention, while one of the directors could be fined more than $25,000.
What does this mean for businesses?
If successful in this case, the barrier to prosecuting businesses in Australia facing allegations of underpayment or record-keeping obligation breaches will be significantly lower.
Businesses will bear the brunt of the responsibility and the cost of putting their records and evidence into a form the court will accept and proving the allegations against them are untrue.
The standard of proof the courts will use to assess a business’s evidence is the balance of probabilities, which would require a business to prove that it’s more likely than not that the allegations are untrue.
The High Court case of Bendigo Regional Institute of Technical and Further Education v Barclay  HCA 32 (Barclay) in 2012 gives some indication as to how the courts would treat a reverse onus claim. It said that if oral evidence given by the employer was accepted as reliable then it would be capable of discharging the burden of proof on the employer.
What should your business be doing?
Businesses need to have the right systems, tools and processes in place to support them. The better your systems, the less time you will spend maintaining them and the more time you can spend ensuring your business is as successful and profitable as possible.
A rigorous payroll system can ensure that a business is adhering to its obligations not just with respect to minimum wage and entitlement laws, but also record-keeping obligations.
Your payroll system won’t just be the software you use, but the protocols and procedures you have in place.
If you’re concerned that your business might not be complying with its obligations, call our office today on 07 5444 1022 to organise an obligation-free compliance audit.
Harry McDonald is a solicitor admitted to practice in the Supreme Court of Queensland, practising in the Commercial and Property Law team at Greenhalgh Pickard Solicitors. Within commercial law, Harry has a keen interest in employment law and enjoys assisting commercial clients in all areas of their employment & industrial relations with experience in employment contracts, sub-contractor agreements, restraint clauses, unfair dismissals, general protections, workplace policies and guidelines and general HR advice.