First published by Workforce Daily on 16 March 2016.

Resource employers have criticised Labor as hypocritical in seeking to introduce jail time for deliberate worker exploitation and warned its new proposed legislation opens the door to criminal offences being introduced down the track for union coercion and intimidation in bargaining.

Meanwhile, the Australian Chamber of Commerce and Industry (ACCI) has cautioned that Labor’s proposed changes to general protections in relation to sham contracting concerns could extend beyond the workplace all together.

Labor introduced its final version of the Fair Work Amendment (Protecting Australian Workers) Bill 2016 in the Senate yesterday following consultation with unions, lawyers and employers.

Labor Senator Doug Cameron cited underpayment allegations at 7-Eleven, Pizza Hut, Baiada and Myer as justification for the Bill.

“These are the visible examples of the illegality and exploitation of workers that is beginning to flourish under the Turnbull government,” he said. “They are the tip of a very large iceberg.”

The legislation proposes new criminal offences, with penalties of up to two years’ jail, for deliberate breaches involving coercion or threat within the meaning of Division 270 —slavery and slavery like conditions— of the Criminal Code. One of the offences is specifically directed to coercion or threats of temporary overseas workers.

The Bill also:

  • lowers the bar to prove sham contracting;
  • makes it easier to pursue phoenix company directors for underpayments; and
  • expands general protection provisions to protect a person who has “raised or proposes to raise an issue or concern” about whether they or someone else has a workplace right.

IR crimes ‘inconsistent’ with ALP history

The Australian Mines and Metals Association (AMMA) criticised the Bill for being “a classic ‘look over here approach'” to divert attention from Labor’s blocking of the return of the Australian Building and Construction Commission.

It said it was “far from clear” there was any case for increasing penalties and statutory obligations, or that the Bill would have any deterrent effect. It noted the high-profile exploitation cases Labor cited were being pursued under current law.

Further, it was “inconsistent” for Labor to pursue additional criminal penalties in the Fair Work Act.

“Labor’s history of removing penal powers from our employment legislation was considered an historic achievement. It seems strange to say the least that Labor is now proposing to reinsert jail terms into the legislation.”

AMMA said the Bill “opens the possibility that in future some of the offences and imprisonment penalties you propose could attach to other breaches of the Fair Work Act, including those relating to threats and intimidation in bargaining”.

“There are a number of areas where unions regularly use threats and contravene the Act. It appears likely some unions may not want to see criminal penalties attached to their day-to-day conduct.”

Jail threat could see directors distancing from ops, push exploitation underground: ACCI

In its response to the exposure draft, ACCI warned criminal liability over underpayments was not warranted on policy grounds.

“A failure to provide employment entitlements strictly in accordance with IRlegislation does not automatically give rise to significant public harm,” it said. “This has the implication that a person could be sent to gaol for a contravention even in circumstances where the impact of the contravention upon the individual is not significant.”

It argued the “corporate veil” that protects individuals from personal liability was essential in ensuring viable levels of investment.

Jail time and higher penalties would discourage people from decision making or taking responsibility for essential functions, pushing non-compliance by persons operating ‘outside the system’ even further “underground”

Further, such penalties could result in businesses ceasing to operate with possible job losses or inability to recover underpayments.

It cautioned Labor against an “exaggerated response” to the actions of a “minority of employers”.

General protections expansion goes ‘well beyond’ person with workplace rights

ACCI also warned that Labor’s expansion of general protections could be “far reaching” and was “much broader” than simply protecting a worker who asks whether someone is an employee not an independent contractor, as suggested by the Explanatory Memorandum.

“This has the potential to give rise to claims from persons not only outside the employment relationship but outside the workplace altogether.”

As an example, the protection would cover a person who raised an issue about whether another person had a workplace right in a way that caused reputational damage to an organisation without having the facts at hand or in breach of confidentiality obligations (eg, during a workplace investigation).

“Extending the protections beyond those with ‘workplace rights’ could give rise to frivolous, vexatious and potentially public and damaging accusations by persons within and outside of the workplace which could in turn give rise to claims when employers attempt to take action to address such conduct.”