Fair Work Amendment (Protecting Vulnerable Workers) Act 2017

The Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 amended the Fair Work Act 2009. It received Royal Assent on 14 September 2017 and the whole Act commenced on 15 September 2017, being the day after Royal Assent.

The amendments are grouped around eight practical areas: higher maximum penalties for certain serious breaches, liability for responsible franchisor entities and holding companies, unreasonable payment and deduction practices, Fair Work Ombudsman notice powers, penalties for hindering or obstructing the Ombudsman and inspectors, penalties for false or misleading information or documents, application and transitional rules, and records.

For most businesses, the key point is that this Act did not create a separate employment code. Instead, it changed how existing Fair Work Act obligations operate and how seriously some breaches are treated. If your business already has payroll, award, record-keeping, franchise oversight or group compliance obligations, this Act raises the consequences of getting those areas wrong.

The Act is especially important for businesses that employ workers in sectors where underpayment risks are common, and for businesses that sit above the direct employer in a franchise or corporate group. A head office, parent company or controlling entity cannot safely assume that workplace compliance is only the local employer's problem if the statutory tests for knowledge and prevention steps are met.

The Act inserted the concept of a serious contravention into the Fair Work Act. A contravention of a civil remedy provision is serious if two elements are present. First, the person knowingly contravened the provision. Second, the person's conduct constituting the contravention was part of a systematic pattern of conduct relating to one or more other persons.

The legislation gives an example based on underpayment. An employer can knowingly fail to pay an employee in full even if the employer does not know the exact amount of the underpayment. If that underpayment is part of a systematic pattern of conduct, it can be a serious contravention.

When deciding whether conduct formed part of a systematic pattern, a court may consider the number of contraventions, the period over which they occurred, the number of people affected, the person's response or failure to respond to complaints, and whether the person also failed to make or keep employee records or failed to give pay slips in accordance with the Act. The legislation also makes clear that this list is not exhaustive.

This matters in practice because repeated payroll errors, repeated award misclassification, repeated failures to provide pay slips, or a pattern of ignoring staff complaints can move a matter beyond an ordinary contravention into a much more serious penalty category. The focus is not only on one isolated event. It is on whether the conduct shows a knowing and systematic pattern.

For the listed civil remedy provisions, the maximum penalty for a serious contravention is 600 penalty units instead of 60 penalty units. In practical terms, the Act increased the maximum by up to ten times for serious breaches. The Act also notes that a person involved in another person's contravention commits a serious contravention only if the principal contravention was itself serious and the involved person knew that it was serious.

For bodies corporate, the Act says a body corporate knowingly contravenes a civil remedy provision if it expressly, tacitly or impliedly authorised the contravention. That means internal approvals, tolerated practices, ignored warnings or accepted payroll settings may all become important when assessing corporate exposure.

The Act created a specific liability regime for responsible franchisor entities and holding companies. This is not limited to direct employers.

A person is a franchisee entity of a franchise if they are a franchisee, including a subfranchisee, and the business they conduct under the franchise is substantially or materially associated with intellectual property relating to the franchise. A person is a responsible franchisor entity for a franchisee entity if they are a franchisor, including a subfranchisor, and they have a significant degree of influence or control over the franchisee entity's affairs.

For holding companies, the regime applies where a body corporate has a subsidiary, within the meaning of the Corporations Act 2001, that is an employer.

The listed underlying breaches are important. The regime applies to contraventions of key civil remedy provisions including the National Employment Standards, modern awards, enterprise agreements, workplace determinations, national minimum wage orders, equal remuneration orders, payment obligations, unreasonable payment requirements, certain annual earnings guarantee obligations, sham contracting provisions, employee record obligations and pay slip obligations.

This means a head office or parent company cannot assume that employment compliance sits only with the local employing entity if the legal test for knowledge and prevention steps is met. The regime is aimed at situations where the higher-level entity has enough influence, control or visibility that it should not be able to stand back from predictable non-compliance.

A responsible franchisor entity contravenes the Act if a franchisee entity employer breaches one of the listed civil remedy provisions, the breach occurs in the franchisee entity's capacity as a franchisee entity, and the knowledge threshold is met. The knowledge threshold is satisfied if the responsible franchisor entity or one of its officers knew, or could reasonably be expected to have known, that the contravention would occur, or knew or could reasonably be expected to have known that a contravention of the same or a similar character was likely to occur.

A holding company contravenes the Act on a similar basis if its subsidiary employer breaches one of the listed civil remedy provisions and the holding company or one of its officers knew, or could reasonably be expected to have known, that the contravention would occur, or that a contravention of the same or a similar character was likely to occur.

The Act also makes clear that civil proceedings against the franchisee entity or subsidiary are not a precondition. In other words, the underlying employer contravention can be relied on for this regime whether or not an order has already been sought or made against that employer.

For business owners, the practical trigger points are usually warning signs such as repeated complaints, audit findings, payroll anomalies, unrealistic labour cost settings, centralised systems that produce non-compliant outcomes, or a history of similar breaches within the network or group. If those signs exist, the question is not only whether the direct employer is exposed. It is also whether the franchisor or holding company had enough knowledge and enough ability to act that it should have taken preventive steps.

A responsible franchisor entity or holding company does not contravene the new provisions if, at the time of the underlying breach, it had taken reasonable steps to prevent a contravention of the same or a similar character.

The Act says a court may consider all relevant matters, including these specific factors: the size and resources of the franchise or body corporate, the extent to which the person had the ability to influence or control the contravening employer's conduct, any action taken to ensure the contravening employer had a reasonable knowledge and understanding of the applicable requirements, arrangements for assessing compliance, arrangements for receiving and addressing possible complaints about underpayments or other alleged contraventions, and the extent to which legal or other arrangements with the contravening employer encourage or require compliance.

That means reasonable steps are context-dependent. A small franchisor may not be expected to build the same systems as a large national network, but it still needs to take active and proportionate steps. There is no general exemption for small business. Doing nothing is unlikely to be enough where the business has influence, receives complaints, or can reasonably foresee the risk of similar breaches.

Examples of steps that align with the factors listed in the Act include providing compliance information and training, requiring franchisees or subsidiaries to understand applicable workplace rules, setting up a process to assess compliance, creating a channel for complaints to be received and addressed, and using contractual or operational arrangements that encourage or require compliance. Whether those steps are sufficient will depend on the circumstances and the level of influence or control.

Businesses should also think about how their own systems may create risk. If head office sets labour budgets, rostering assumptions, payroll templates, pricing models or operational rules that make compliance harder, those settings may be relevant to both knowledge and prevention. Reasonable steps are not just about having a policy. They are about whether the business used its actual influence in a way that helped prevent the same kind of breach.

The Act strengthened the rules about requiring employees and prospective employees to spend or pay money, and about deductions from wages for the employer's benefit.

An employer must not directly or indirectly require an employee to spend, or pay to the employer or another person, an amount of the employee's money or an amount payable to the employee in relation to work if the requirement is unreasonable in the circumstances and, for a payment, the payment is directly or indirectly for the benefit of the employer or a related party.

The Act also extends this protection to prospective employees. A prospective employer must not directly or indirectly require a prospective employee to spend, or pay to the prospective employer or another person, an amount of the prospective employee's money in connection with employment or potential employment if the requirement is unreasonable in the circumstances and the payment is directly or indirectly for the benefit of the prospective employer or a related party.

In addition, a term of a modern award, enterprise agreement or contract of employment has no effect to the extent it permits an unreasonable deduction for the benefit of the employer or a related party, or permits or imposes an unreasonable requirement to spend or pay an amount. For employees under 18, a term permitting a deduction or requiring a payment has no effect unless the deduction or payment is agreed to in writing by a parent or guardian.

These rules are especially relevant where businesses charge for uniforms, training, equipment, accommodation, transport, administration fees or onboarding costs, or where they require applicants to pay money as part of recruitment. The key statutory questions are whether the requirement is unreasonable in the circumstances and whether the payment or deduction benefits the employer or a related party. A clause in a contract does not fix the problem if the Act says that term has no effect.

The Act specifically links record-keeping and pay slip compliance to the serious contravention framework. When a court considers whether conduct was part of a systematic pattern, it may look at whether the person also failed to make or keep employee records in accordance with section 535, or failed to give pay slips in accordance with section 536.

That does not mean every record or pay slip issue is automatically a serious contravention. It does mean that poor records and missing pay slips can become highly relevant when there is also an underpayment or other substantive breach.

For businesses, this makes records more than an administrative task. Accurate employee records and compliant pay slips are part of risk control. They help show what was paid, when it was paid, how hours were recorded, and whether the business responded properly when issues were raised. If records are incomplete or pay slips are missing, it becomes harder to show that any problem was isolated rather than systematic.

The Act expanded the Fair Work Ombudsman's powers by introducing an FWO notice regime and related enforcement provisions. The available legislation text shows that the amendments inserted definitions for FWO notices, created a penalty provision connected with section 712B, and added provisions dealing with delegation and the issue of FWO notices. The text also shows that the Act separately amended the Fair Work Act in relation to hindering and obstructing the Fair Work Ombudsman and inspectors, and false or misleading information or documents.

The practical point for businesses is straightforward. If the Fair Work Ombudsman or an inspector is investigating, businesses should respond carefully, preserve records, ensure answers are accurate, and avoid conduct that could be characterised as obstruction or the provision of false or misleading material.

The legislation text available here cuts off before the full detail of the FWO notice provisions and the exact wording of the obstruction and false information amendments. The existence of those amendment parts is clear from the Act and table of contents, and the text confirms that penalties were inserted for at least some notice-related contraventions. Before relying on this page for a live investigation response, businesses should check the current consolidated Fair Work Act provisions and any notice received.

Small businesses are not carved out of these amendments. If you employ staff, make deductions, issue pay slips, keep records, or operate through a franchise or group structure, the Act can affect you.

The main qualification is that some obligations are assessed in context. For example, when a court considers whether a responsible franchisor entity or holding company took reasonable steps, it may consider the size and resources of the franchise or body corporate. That means the expected compliance response may differ between a small network and a large national system. But the obligation to take reasonable steps still exists.

For a small business employer, the most common risk areas are usually practical rather than technical: paying the wrong award rate, using the wrong classification, making deductions that mainly benefit the business, failing to issue proper pay slips, poor time records, and not acting when workers complain. For a small franchisor or parent company, the risk often sits in assuming that local operators are solely responsible even though the head business has influence, receives complaints or sets systems that affect labour costs and payroll outcomes.

This page explains the 2017 amending Act and the practical effect of the amendments shown in the legislation text. Before acting on it, check the current consolidated Fair Work Act 2009, the current value of a penalty unit, any later amendments, and the specific award, agreement or minimum standard that applies to your workforce.

If your business is in a franchise or corporate group, also check whether you meet the statutory definitions of franchisee entity, responsible franchisor entity, subsidiary and holding company, and whether your business has a significant degree of influence or control over the employing entity's affairs.

If you are dealing with deductions, applicant payments, or a Fair Work Ombudsman investigation, review the exact wording of the current provisions and the documents used in your business, including contracts, policies, payroll settings, complaint channels and record-keeping systems.