ByLawyers News and Updates

Update: Sharp increase to Fair Work Act penalty amounts from 1 July 2017

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By Brad Petley

Principal of Acumen Lawyers and the By Lawyers employment law specialist

The June and July period has heralded a number of important changes to workplace laws. Included in those changes is a 1 July increase to the value of a Commonwealth penalty unit. The flow on effect is that maximum fines for breaches of the Fair Work Act have risen sharply. In this update, we explain why understanding the consequence of this change is so important for employers.

What is the increase?

From 1 July 2017, penalty units under federal laws, including the Fair Work Act 2009 (Cth) increased from $180 to $210.

What is a penalty unit?

For federal legislation, the value of a penalty unit is determined by the Crimes Act 1914 (Cth).

Civil (monetary) penalties under federal legislation are calculated using ‘penalty units’ rather than expressing the penalty as a dollar amount.

How does it relate to workplace law?

Most of the Fair Work Act provisions which impose obligations (e.g. on employers) are also designated as civil remedy provisions.

Civil (monetary) penalties in the Fair Work Act are expressed as multiples of a penalty unit (not a dollar value).

For example, civil penalties attach to the following:

  • Breaching the National Employment Standards;
  • Breaching a modern award;
  • Breaching an enterprise agreement;
  • Engaging in prohibited adverse action (general protections);
  • Breaching right of entry requirements;
  • Breaching a stop bullying order;
  • Breaching orders relating to unlawful industrial action.

A court may make a pecuniary (monetary) penalty order against a person (including a corporation) if that person has breached a civil remedy provision.

Why should employers be concerned about the increase?

Put simply, fines are bad for business, especially big ones.

From 1 July, the maximum penalty (for a single breach) is $63,000 for a corporation (increased from $54,000), and $12,600 for an individual (increased from $10,800).

A civil penalty order could have a crippling effect on an organisation, particularly if there are multiple breaches of the Fair Work Act.

The reality of many workplaces is that policies and processes (if not reviewed) can become out of date.

Some managers may become blasé about their obligations. New managers may escape the induction process.

Out of date or substandard workplace policies can lead managers into error.

Even where policies are up-to-date, there needs to be a continuous program of ensuring that managers are aware of their responsibilities.

What should employers do?

Employers should do two things immediately:

  1. Review their policies and procedures to ensure they are compliant with the Fair Work Act.
  2. Organise refresher training for managers about workplace policies and procedures to reduce the risk of inadvertent breaches of the Fair Work Act.

A process of regular ‘review and refresh’ is an effective risk minimisation strategy.

From 1 July 2017 – Foreign Resident Capital Gains Withholding Payments

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For contracts entered into on or after 1 July 2017 the new foreign resident capital gains withholding (FRCGW) rate and threshold will apply to:

  • real property disposals where the contract price is $750,000 and above (currently $2 million); and
  • the FRCGW withholding tax rate will be 12.5% (currently 10%).

All precedents and commentaries were updated to reflect these changes.

Contract for Sale of Shares – Extensive

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A new precedent has been provided. The Contract for the Sale of Shares – Extensive covers many of the issues that may arise in complex transactions. It may be found in our Companies, Trusts and Partnership Guide in the Companies section within Deeds and agreements.

Foreign Resident Capital Gains Withholding Payment

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Early Alert – Foreign Resident Capital Gains Withholding Payment

It is proposed that from 1 July 2017 the regime will apply to all real property with a market value of $750,000 or above. Once the bill is law this alert, the commentary and precedents will be updated.

Personal Property Securities

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Personal Property Securities

NOVEMBER 
  • The commentary has been updated to discuss transitional security interests and migrated security interests as the transitional period for migrated registrations ends 31 January 2017.
  • Costs Agreements – Reference to interstate costs laws added and updated interest clause
OCTOBER 
  • Costs Agreements
    • Disputes section improved, fields for client and firm details added, trust account details added, solicitor’s lien added, execution clauses for individuals and corporations added and general formatting and grammatical improvements.
    • VIC/NSW -Included reference to time limit for bringing costs assessment, total estimate of legal costs section with provision for variables, and authority to receive money into trust.
    • WA – Added clause on scale fees.
AUGUST 
  • Costs Agreements have been added for Northern territory, and Tasmania.
APRIL 
  • File Cover Sheets for all publications have been completely re-formatted for a better look.
MARCH 
  • New commentary added on disputing a registration, covering both the administrative process under the Personal Properties Securities Act 2009 and the judicial process. Associated precedent Amendment Demand and Amendment Statement also added to the matter plan
FEBRUARY
  • This matter plan has been reviewed and reorganized with a view towards a more intuitive approach.
  • All federal publications now include a costs agreement for the ACT.
  • Making life a little easier for practitioners – look out for Blank Deed, Agreement and Execution Clauses folder in the matter plan at the end of each Getting the Matter Underway.

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