Court set to test presumption against employers who fail to keep records
The Federal Circuit Court is set to hand down the first decision to consider a new evidentiary presumption in the Fair Work Act 2009 (Cth) (the Act) relating to employee records.
In 2017, the Federal Government amended the Act by making a number of changes intended to protect vulnerable workers. The effect of one such change is that, where an allegation of underpayment is made and the employer has failed to keep records required by the Act, the court will presume that the employer has, in fact, underpaid its workers, unless the employer can prove otherwise.
This particular amendment was introduced after a number of franchisees of high-profile businesses, such as 7-11, Caltex and Dominos, were found to have underpaid wages and failed to keep proper records.
Fair Work Ombudsman v A&K Property Services Pty Ltd & Ors
The new presumption is set to be applied in the case of Fair Work Ombudsman v A&K Property Service comes before the Court later this year. The case concerns nine workers who were allegedly underpaid a total of $19,476 in entitlements under the relevant Award, including minimum ordinary hourly rates, weekend penalty rates and overtime rates.
The company, which operates two sushi outlets, was issued with a notice to produce records by the Fair Work Ombudsman. However, its directors claimed it did not keep the requisite employment records or pay slips and instead produced “reconstructed” documents.
The company now faces penalties of up to $63,000 per contravention, and its three directors each face penalties of up to $12,600 per contravention for their alleged involvement.
- Previously existing loopholes which enabled employers to avoid penalties for underpayment are now closed. Businesses that don’t meet record-keeping or pay slip obligations without reasonable excuse are at a higher-than-ever risk of liability under the Act.
- To avoid liability, employers must understand what employment records they are obliged to keep, how long they are required to keep them, what form the records should take and the rights of employees and others to inspect them.
- To avoid inadvertent underpayments, employers must ensure they update employees’ classifications under applicable modern awards or enterprise agreements, as well as annual minimum wage increases, and any other types of pay changes (e.g. when junior or apprentice rates change).
If you would like further information in relation to your record-keeping obligations, or if you require tailored and practical assistance with your record keeping procedures, please contact our Employment, Safety and Migration team.
This article was written by Erin McLeod, Law Graduate – Employment, Safety and Migration.