Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

by leave—I move amendments (1) to (3) on sheet 2, as circulated in my name, together:

(1) Schedule 1, heading to Part 1, page 3 (lines 2 to 4), omit the heading, substitute:

Part 1—Contraventions of civil penalty provisions

(2) Schedule 1, page 3 (after line 8), after item 1, insert:

1A At the end of section 535

Add:

Note: If an employer does not comply with an obligation under the regulations dealing with the inspection of records, the onus of proof may be reversed in proceedings in relation to a contravention of certain civil remedy provisions.

(3) Schedule 1, item 13, page 7 (after line 18), after section 557B, insert:

557C Failure to allow records to be inspected—reversal of onus

(1) If:

(a) an application is made under this Part in relation to a contravention by an employer of a civil remedy provision referred to in subsection (2); and

(b) a matter is alleged in the application in respect of which the employer is required under section 535 to make and keep employee records; and

(c) the employer has not complied with a requirement under the regulations for the inspection of the records by an employee, or former employee, to whom the application relates;

it is presumed that the matter is as alleged by the applicant, unless the employer proves otherwise.

(2) The civil remedy provisions are the following:

(a) subsection 44(1) (which deals with contraventions of the National Employment Standards);

(b) section 45 (which deals with contraventions of modern awards);

(c) section 50 (which deals with contraventions of enterprise agreements);

(d section 280 (which deals with contraventions of workplace determinations);

(e) section 293 (which deals with contraventions of national minimum wage orders);

(f) section 305 (which deals with contraventions of equal remuneration orders);

(g) subsection 323(1) (which deals with methods and frequency of payment);

(h) subsection 323(3) (which deals with methods of payment specified in modern awards or enterprise agreements);

(i) subsection 325(1) (which deals with unreasonable requirements to spend amounts);

(j) any other civil remedy provisions prescribed by the regulations.

(3) Subsection (1) does not apply where, despite all reasonable care having been taken by the employer, the employer is unable to comply with a requirement in the regulation for the inspection of records due to exceptional circumstances beyond the employer's control.

These amendments concern what happens when a worker is making a claim for an underpayment and the employer has not kept proper records of the hours that the worker has worked. The government has said that, in introducing the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017, one of the things that brought it here was the horrendous exploitation at 7-Eleven, which was revealed by many courageous people who came forward and broke their silence, a number of investigative journalists at Fairfax and Michael Fraser, an advocate who has pursued this matter relentlessly.

One of the things that became clear during the investigations, including during the Senate inquiry, was that records that were being kept by 7-Eleven businesses were not always what they seemed. In fact, there were situations in which people were being asked to work different hours to what was appearing in the records. That was one of the ways in which some significant exploitation was occurring: sign the book to say that you have worked X hours but we are in fact only going to pay you for Y hours. Often that came with a subtle threat to many of these overseas workers who were here on visas: if you complain about it then we are going to have your visa revoked and you are going to be deported.

What is crystal clear from all of this and the reason that we are debating this bill is that, in many instances, workers are being exploited in ways that involve dubious record keeping. This is one of the key ways in which vulnerable workers get exploited. Not only that; I know, as someone who before coming into this parliament spent 12 years standing up for many vulnerable workers and bringing litigation on their behalf, there may be instances where no records are kept at all. It is something that is so critical that the Fair Work Ombudsman has recently developed an app for it and has gone out publicly and promoted it so that workers themselves can use the app to record the hours of work that they keep. It has been identified as such a problem that, where you do not have accurate records, it may be a barrier to bringing a successful prosecution for getting your pay.

The Fair Work Ombudsman knows that it is such a problem that it is encouraging people to download an app so that employees can keep an accurate record of the hours that they work. When those employees bring a complaint or a prosecution through either the Fair Work Ombudsman or someone else they may have a good record—hopefully they do—but it may be the case that the employer has kept no record or that they have kept a dodgy record, and that may in fact be part of the claim. We know it is widespread that employers do not keep proper records in situations that involve vulnerable workers, and this amendment addresses that problem. It says that if an employee brings a claim and the employer has not kept proper records as required by law then the evidentiary onus shifts and it is presumed that the claim made by the worker is right, unless the employer can rebut it. That is a very sensible amendment, because it only applies where employers have not complied with the law. It does not apply in every case.

Where employers have breached the law and not kept proper records, as they are required to do, it is presumed an employee's claim is right, unless the employer can disprove it. This will encourage employers to do nothing more than abide by the law. It is imposing no obligation on them. They could discharge the effect of this amendment if they keep records as required by law. So it is a very sensible amendment that gives effect to the bill, and it is one that the government and the opposition should support, because it will allow many of the complaints that the government has spoken about during this debate, such as those that have been uncovered at 7-Eleven, to be successfully prosecuted. I remind the government that it only applies in instances where the employer has failed to comply with the law, so it does not impose additional obligations over and above that. I commend these amendments to the House.

Christian Porter (Pearce, Liberal Party, Minister for Social Services) Share this | Link to this | Hansard source

I thank the member for Melbourne for his contribution. The amendments that the member for Melbourne seeks to move, (1) to (3), would in effect amend the Fair Work Act to reverse the onus in underpayment cases. So, where the employer had failed to keep proper records under section 535—in other words, the employer would have failed to produce employee records to the employee on request under the Fair Work regulations—the employee's underpayment claim is assumed to be correct, unless the employer proves otherwise. The amendments would say that this would not apply in exceptional circumstances beyond the employer's control. The government's position is not to accept these amendments. The government opposes amendments (1) to (3), which reverse the onus, because it does not consider that in these relevant circumstances reversing the onus, which is a very significant matter in jurisprudence of this type, is justified. In underpayment cases, the applicant bears the onus of proof, and there is insufficient justification in all the circumstances to change that very fundamental principle of justice.

In this sense, we consider the proposal is not fair, because it starts with the assumption that all employers are doing the wrong thing, and that is an assumption that the government cannot agree with. It also may encourage opportunistic claimants and would punish small businesses that have limited resources and are more likely to make genuine errors. This proposal from the member for Melbourne, unfortunately, is indiscriminate. It puts every employer who fails to keep proper records in precisely the same situation, whether the underpayments have been deliberate or not. Our assessment of the defence that is, in effect, promoted by the member for Melbourne—that of exceptional circumstances—is that that defence of exceptional circumstances is framed so narrowly that it would virtually never apply.

The government have proposed in this bill what we think is a more nuanced approach, which targets the problem of deliberate wrongdoing, where employers have opted to consciously, deliberately and systemically underpay their employees. This series of amendments, (1) to (3), is a series that the government are not going to support.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

I have not yet heard from the opposition, so I do not know if the opposition is going to support these sensible amendments.

I have a question for the minister. If an applicant comes up to an employer and says, 'I want to make a claim against you,' and it turns out the employer has not kept proper records as required by law, the minister said there are other parts of the bill that strike the appropriate balance. Can the minister please point to the parts of the bill that will assist an employee to make such a claim in circumstances where the employer has basically failed to comply with the law, failed to have the proper records? If they do not have the proper records, and if they have done it deliberately, doesn't that clearly put an employee on the back foot and make it more difficult for the employee to pursue their claim, through no fault of their own?

The minister suggested that this was somehow reversing the onus of proof in a claim for underpayment of wages. It is an evidentiary onus that shifts. It is just an evidentiary onus, and one that the employer can discharge. Given that, and given that this is a well-known legal principle, does that change the minister's mind?

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

While the words used by the member for Melbourne were put in the form of a question, I think you were putting a proposition to the chair and I will ask the minister to respond.

Christian Porter (Pearce, Liberal Party, Minister for Social Services) Share this | Link to this | Hansard source

I thank the member for Melbourne. Without being able to point to the precise provisions of the relevant legislation, I understand that as part of the process the government has engaged in the penalties for improper records or failure to keep proper records have been increased. They are standing penalties under the act. They have been increased. So there is a standing obligation on the person who is responsible for keeping those records to keep them properly. We think that in all of the circumstances that is sufficient.

Question negatived.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

by leave—I move Australian Greens amendments (4) to (15) together:

(4) Schedule 1, item 14, page 8 (after line 6), after the definition of franchisee entity, insert:

indirectly controlled employer: see subsection 558AA(2).

indirectly responsible entity: see subsection 558AA(1).

(5) Schedule 1, item 17, page 9 (after line 16), after section 558A, insert:

558AA Meaning of indirectly responsible entity and indirectly controlled employer

(1) A person is an indirectly responsible entity for an employer if:

(a) the employer, or an employee of the employer, directly or indirectly supplies goods or services to the person; and

(b) the person has influence or control over the employer's affairs; and

(c) that influence or control includes influence or control over the conditions under which work is done by employees of the employer, the amount paid for work done by employees of the employer or the way in which employees are paid for work done for the employer.

(2) An employer for which there is an indirectly responsible entity is an indirectly controlled employer.

(6) Schedule 1, item 17, page 10 (after line 26), after subsection 558B(2), insert:

Indirectly responsible entities

(2A) A person contravenes this subsection if:

(a) an employer contravenes a civil penalty provision referred to in subsection (7); and

(b) the person is an indirectly responsible entity for the employer; and

(c) the person has failed to take all reasonable steps to ensure that a contravention by the employer of the same or a similar character was likely to occur.

(7) Schedule 1, item 17, page 10 (line 29), omit "subsection (1) or (2)", substitute "subsection (1),

(8) Schedule 1, item 17, page 10 (line 30), omit "paragraph (1) (a) or (2) (b)", substitute "paragraph (1) (a), (2) (b) or (2A) (a)".

(9) Schedule 1, item 17, page 10 (line 35), omit "franchisee entity or subsidiary", substitute "franchisee entity, subsidiary or indirectly controlled employer".

(10) Schedule 1, item 17, page 11 (line 3), omit "franchise or body corporate", substitute "franchise, body corporate or indirectly responsible entity".

(11) Schedule 1, item 17, page 11 (line 7), omit "paragraph (1) (a) or (2) (b)", substitute "paragraph (1) (a), (2) (b) or (2A) (a)".

(12) Schedule 1, item 17, page 11 (after line 22), after subparagraph 558B(4) (e) (ii), insert:

or (iii) the trading arrangement entered into between the indirectly responsible entity and the indirectly controlled employer;

(13) Schedule 1, item 17, page 11 (line 31), omit "paragraph (1) (a) or (2) (b)", substitute "paragraph (1) (a), (2) (b) or (2A) (a)".

(14) Schedule 1, item 17, page 13 (line 3), omit "558B(1) or (2)", substitute "558B(1), (2) or (2A)".

(15) Schedule 1, item 17, page 13 (line 4), omit "franchisee entity or subsidiary", substitute "franchisee entity, subsidiary or indirectly controlled employer".

I am disappointed that I did not get support from the government or the opposition for the onus of proof amendments. They were very sensible amendments that would facilitate prosecution only in instances where the employer has failed to keep proper records. I am stunned that they were not agreed to.

These amendments go to the same point that the general bill is trying to make, about how you make people higher up the chain responsible for the actions of people lower down the chain. What we know from the 7-Eleven example, and increasingly from other examples as well, is that the people sitting up the top, who are the ones who ultimately make the money, use contracting chains to shift risk and responsibility further down the chain, ultimately to the worker who performs the work, while the money and the profits flow up to the top, to head office. That underlays the whole 7-Eleven scandal and the others that are unfolding at Caltex and at Domino's, to which the government has referred while introducing this bill.

This bill is not headed the 'franchisee bill'; it is the 'protecting vulnerable workers bill'. We know that vulnerable workers exist right across the board. I spent many years bringing cases to the Federal Court on behalf of outworkers and their unions. Outworkers are the people who get paid $2 or $3 an hour to make clothes in backyard sheds in cities right around the country. They do not get paid annual leave, they do not get workers compensation and they do not get sick leave; they have to look after everything themselves. Those clothes that they get paid $2 or $3 an hour to make get sold for $200 or $300 in the main streets of our cities.

The Fair Work Act recognises that this is a problem in the textile, clothing and footwear industries and there are provisions in the Fair Work Act that deal with outworkers. But what is becoming increasingly clear is that this kind of behaviour, as this bill exemplifies, is not just confined to the textile, clothing and footwear industries; it is happening right across the board. It is happening in transport. It is happening in industries that previously people might have thought would be immune to it. We are finding that the head office increasingly puts distance between itself and the people who ultimately do the work so that sometimes the small business who is closest to the employee in question ends up carrying the can.

This set of amendments takes the basic principles of the bill—that is, head offices need to take more responsibility for the conditions under which work is performed by the people who perform work for their benefit or under their name—and says 'Let's expand it across the board.' If it is good for what is happening in franchises, it is good for other workers as well. The effect of the amendments would be that if you can follow the contracting chain all the way up from the worker who performs the work to the ultimate beneficiary and controller of that then it does not matter how many legal niceties and intermediate steps the employer has put in between them and the worker who ultimately performs that, the person at the top is going to hold some responsibility. This is the principle that is at work in this bill. In a sense, it is a principle that is at work in the Fair Work Act when it comes to the textile, clothing and footwear workers, and this is an opportunity to expand it.

We know that the use of contracting chains is one of the key ways in which workers are made to become vulnerable—when they do not know exactly who their ultimate employer is because there is a series of intermediate companies, some of which might be shell companies, between them. This will mean that the worker, when they are exploited, if they are vulnerable, can go to the top of the chain and get some redress. If the person at the top of the chain wants to then follow it back down the chain, all well and good. But it will put the worker in a stronger position because the person doing the work—maybe it is because they are wearing a uniform or maybe it is because they are working in a shop that is branded with them—will know that they can go back to the head office, back to the head contractor, and seek redress. These are good amendment that address a growing problem, and I commend them to the House.

Christian Porter (Pearce, Liberal Party, Minister for Social Services) Share this | Link to this | Hansard source

I thank the member for Melbourne for his contribution. The government's position with respect to amendments (4) to (15) is that we are not inclined to support them. What these amendments would do, in effect, is extend the proposed franchisor holding company responsibilities to something that is described as 'indirectly responsible entities'. So the entity would have responsibility for an employer if the employer or an employee directly or indirectly supplied goods or services to the entity, or the entity has influence or control over the employer's affairs and that influence or control could include the conditions under which the work is done, the amount paid for the work done by employees or the employer or the way in which the employees are paid for work done by the employer.

The reason that the government opposes these amendments is that they must surely be recognised as regulatory overreach. There is certainly insufficient evidence at present to support very broad amendments of this type, which would have incredibly broad effects on the overall economy. The bill certainly addresses specific issues that have arisen in the context of defined business networks, like franchise businesses, for which a clear case for intervention has been made. The proposed amendments (4) to (15) are very broad, with almost all businesses transacting with many other businesses on a daily basis. It is simply not clear how far the proposed responsibility would extend or to how many other employers. We consider it very much the case that insufficient thought or consultation has been undertaken as to who will be impacted and what will be required.

Just looking at the amendments, to say that an entity would have responsibility for an employer if the entity directly or indirectly supplied goods or services seems to me to encompass such an incredibly broad and ill-defined range of circumstances that it would be almost unworkable as a matter of jurisprudence in practice. So these are not amendments that the government will be supporting.

Question negatived.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

by leave—I move amendments (1) to (3) on sheet 1, version 2, together:

(1) Schedule 1, item 17, page 9 (lines 11 to 16), omit subsection 558A(2), substitute:

(2) A person is a responsible franchisor entity for a franchisee entity of a franchise if:

(a) the person is a franchisor (including a subfranchisor) in relation to the franchise; or

(b) the person:

  (i) is a related body corporate of a franchisor (including a subfranchisor) in relation to the franchise; and

  (ii) the person has a significant degree of influence or control over the franchisor (or subfranchisor).

(3) Schedule 1, page 13 (after line 29), after part 2, insert:

Part 2A—Recovery of unpaid amounts for franchisee employees

Fair Work Act 2009

17A Section 12

Insert:

apparent responsible franchisor entity: see subsection 789GE(2).

franchisee employee: see subsection 789GC(1).

franchisee employer: see subsection 789GC(1).

franchise -related work: see subsection 789GC(1).

17B Section 12 (definition of unpaid amount )

Repeal the definition, substitute:

unpaid amount:

(a) in relation to TCF work performed by a TCF outworker: see subsections 789CA(1) and (4); and

(b) in relation to franchise-related work performed by a franchisee employee: see subsection 789GC(1).

17C After subsection 9(5B)

Insert:

(5C) Part 6-4C provides for the recovery of unpaid amounts for franchisee employees.

17D After paragraph 789BA(1 ) ( f)

Insert:

(fa) Part 6-4C (recovery of unpaid amounts for franchisee employees);

17E After Part 6 -4B

Insert:

Part 6 -4C—Recovery of unpaid amounts for franchisee employees

Division 1—Introduction

789GA Guide to this Part

This part provides for employees employed by a franchisee entity to recover unpaid remuneration from the responsible franchisor entity for the franchisee entity.

789GB Meanings of employee and employer

In this part, employee means a national system employee, and employer means a national system employer.

Division 2—Recovery of unpaid amounts for franchisee employees

789GC When this Division applies

Franchisee employees not paid for work in certain circumstances

(1) This division applies if:

(a) a franchisee entity is the employer (the franchisee employer) of an employee (the franchisee employee); and

(b) the franchisee employee performs work (franchise-related work) for the franchisee employer for the purposes of business activities carried on by the employer under the franchise; and

(c) the franchisee employer does not pay an amount (the unpaid amount) that is payable, in relation to the franchise-related work, by the employer:

  (i) to the franchisee employee; or

  (ii) to another person, for the benefit of the franchisee employee;

on or before the day when the amount is due for payment; and

(d) the unpaid amount is payable under:

  (i) a contract; or

  (ii) this act, or an instrument made under or in accordance with this Act; or

  (iii) another law of the Commonwealth; or

  (iv) a transitional instrument as continued in existence by schedule 3 to the Transitional Act; or

  (v) a state or territory industrial law, or a state industrial instrument.

(2) Without limiting paragraph (1) (c), the unpaid amount may (subject to paragraph (1) (d)) be an amount of any of the following kinds that relates to (or is attributable to) the franchise-related work:

(a) an amount payable by way of remuneration or commission;

(b) an amount payable in respect of leave;

(c) an amount payable by way of contributions to a superannuation fund;

(d) an amount payable by way of reimbursement for expenses incurred.

789GD Liability of responsible franchisor entity for unpaid amount

(1) Each responsible franchisor entity for the franchisee employer is liable to pay the unpaid amount.

(2) If there are 2 or more responsible franchisor entities for the franchisee employer, those entities are jointly and severally liable for the payment of the unpaid amount.

(3) Subject to subsection 789GG(2), this section does not affect the liability of the franchisee employer to pay the unpaid amount.

789GE Demand for payment from an apparent responsible franchisor entity

(1) The franchisee employee, or a person acting on behalf of the franchisee employee, may give an apparent responsible franchisor entity for the franchisee employer a written demand for payment of the amount that the franchisee employee reasonably believes the entity is liable for under section 789GD in relation to the franchise-related work.

(2) An entity is an apparent responsible franchisor entity for the franchisee employer if the franchisee employee reasonably believes that the entity is a responsible franchisor entity for the franchisee employer.

(3) The demand must:

(a) specify the amount, and identify the franchisee employer; and

(b) include particulars of the franchise-related work to which the amount relates, and why the amount is payable by the entity to which the demand is given; and

(c) state that if the specified amount is not paid by a specified time, proceedings may be commenced against the entity under section 789GF.

(4) The time specified for the purpose of paragraph (3) (c) must not be less than 14 days after the demand is given to the entity.

789GF Court order for entity to pay amount demanded

(1) If:

(a) in accordance with section 789GE, an apparent responsible franchisor entity for the franchisee employer has been given a demand for payment of a specified amount; and

(b) the amount has not been paid in full by the time specified in the demand;

a person or organisation specified in subsection (2) (the applicant) may commence proceedings for an order requiring the apparent responsible franchisor entity or the responsible franchisor entity for the franchisee employer to pay the specified amount.

(2) The proceedings may be commenced:

(a) by the franchisee employee; or

(b) on the franchisee employee's behalf, by:

  (i) an organisation that is entitled to represent the industrial interests of the franchisee employee; or

  (ii) an inspector.

(3) The proceedings may be commenced in:

(a) the Federal Court; or

(b) the Federal Circuit Court; or

(c) an eligible state or territory court.

(4) Subject only to subsections (5) and (6), the court may make an order requiring a responsible franchisor entity for the franchisee employer to pay, to the franchisee employee or to another person on the employee's behalf, the specified amount (or so much of that amount as the applicant alleges is still owing).

(5) The court must not make an order under subsection (4) in relation to a responsible franchisor entity for the franchisee employer if the entity satisfies the court that the entity is not liable under section 789GD to pay any of the specified amount.

(6) If a responsible franchisor entity for the franchisee employer satisfies the court that the amount of the entity's liability under section 789GD is less than the specified amount (or is less than so much of that amount as the applicant alleges is still owing), the court must not make an order under subsection (4) requiring the entity to pay more than that lesser amount.

(7) In making the order, the court must, on application, include an amount of interest in the sum ordered, unless good cause is shown to the contrary.

(8) Without limiting subsection (7), in determining the amount of interest, the court must take into account the period between the day when the unpaid amount was due for payment by the franchisee employer and the day when the order is made.

(9) Proceedings cannot be commenced under this section more than 6 years after the time when the unpaid amount became due for payment by the franchisee employer.

789GG Effect of payment by entity (including entity ' s right to recover from franchisee employer)

(1) This section applies if an entity pays an amount in discharge of a liability of the entity under section 789GD, or pursuant to an order under section 789GF.

(2) The payment discharges the liability of the franchisee employer for the unpaid amount, to the extent of the payment. This does not affect any right that the entity has to recover an equivalent amount from the franchisee employer (under this section or otherwise) or from another person, or to be otherwise indemnified in relation to the making of the payment.

(3) The entity may, in accordance with this section, recover from the franchisee employer an amount (the recoverable amount) equal to the sum of:

(a) the amount paid by the entity as mentioned in subsection (1); and

(b) any interest paid by the entity in relation to that amount pursuant to an order under section 789GF.

(4) The entity may recover the recoverable amount:

(a) by offsetting it against any amount that the entity owes to the franchisee employer; or

(b) by action against the franchisee employer under subsection (5).

(5) The entity may commence proceedings against the franchisee employer for payment to the entity of the recoverable amount. The proceedings may be commenced in:

(a) the Federal Court; or

(b) the Federal Circuit Court; or

(c) an eligible state or territory court.

(6) The court may make an order requiring the franchisee employer to pay the entity the recoverable amount (or so much of it as is still owing) if the court is satisfied that:

(a) this section applies as mentioned in subsection (1); and

(b) the entity has not otherwise recovered the recoverable amount in full from the franchisee employer.

(7) In making the order the court must, on application, include an amount of interest in the sum ordered, unless good cause is shown to the contrary.

(8) Without limiting subsection (7), in determining the amount of interest, the court must take into account the period between the day when the recoverable amount was paid by the entity and the day when the order is made.

(9) Proceedings cannot be commenced under this section more than 6 years after the time when the entity paid the recoverable amount.

789GH Division does not limit other liabilities or rights

Nothing in this division limits any other liability or right in respect of the entitlement of the franchisee employee to the unpaid amount (or to have the unpaid amount paid to another person for the employee's benefit).

(3) Schedule 1, page 31 (after line 25), after item 19, insert:

19A Application of the amendments—recovery of unpaid amounts for franchisee employees

Part 6-4C, as inserted by Schedule 1 to the amending Act, applies in relation to an amount that is payable by a franchisee employer if the franchise is entered into on or after the commencement of this part.

This is a very important set of amendments that closes a huge loophole in this bill. It is a set of amendments that I would hope the opposition will support and that I hope that the government, on reflection, will support as well.

What has become crystal clear as we have looked at the exploitation at 7-Eleven is that the way the exploitation in the system works is this: the head office sits at the top and controls pretty much everything that the franchisees do. It is why when you walk into one 7-Eleven shop it looks pretty much like every other 7-Eleven shop. The head office controls how stock is displayed, it controls the signage and, what we found out through the course of the inquiry, it also controls the payroll records and gives directions about rostering and the like.

What we know is that that is the way the franchise system operates. The head office, the head franchisor, wants all the franchises to look the same because that then builds the business. Then, when they want to have specials and the like, they often have—as we found out in the case of Domino's Pizza—significant direction. They can tell the franchisee how much they are going to sell a particular pizza for. They can dictate what kinds of posters go up in a window and what the shop is meant to look like. In short, the head office makes its money by controlling what happens at the store level.

Now, the one area that they turn a blind eye to is how much the workers at that store actually get paid. So they are happy to control everything else, but what we found out is that they do not then take that the next step and say, 'And we also want to control this and make sure you are paying your workers properly.' In fact, in the 7-Eleven incident we found out that it was even worse than that; they were complicit in it. It was the payroll system of the head office that was effectively being used to facilitate all these underpayments. So the head office was completely implicated in that.

What we need to do, if this bill is to have any teeth at all, is to make the head office take some responsibility, not only for the cleanliness of the store, how the stock is displayed or whether the chewing gum is in the right place but also whether the workers are being paid correctly. What this amendment will do is to close the loophole that the government has allowed in its legislation where a head office can get out of any responsibility for what is happening under its name simply by saying, 'Oh well, we couldn't reasonably have known about it.' The government has given the head offices a big out, in the legislation. If a head office, for example, gets the franchisee to sign up to a contract, to promise that they are doing the right thing, to say all the right words and to put all the right words down on paper, then when their poor old employee turns around and finds out that they have been underpaid and done over, and they come along and they say, 'Oh, the government has passed a protecting vulnerable workers act; I've got the rights to go to the head office, complain and get some recompense,' they will front up to the head office and potentially bring a legal case, only for the head office to then rely on the words of the legislation and say, 'Well, we couldn't reasonably have known that was what was going on in our name.'

Those words and the lack of responsibility up the chain will allow the 7-Eleven head offices of the future in the future scandals to get off the hook, potentially. Because it is ambiguous, we need to fix it up. What we also need is to make sure that the vulnerable worker—and we are dealing with vulnerable workers here; that is the point that the government is making—is not forced to go and have the argument about what the head office could or could not reasonably have known. How is someone who is getting paid a few dollars an hour in a position to litigate about what was going on in the boardrooms of 7-Eleven or elsewhere? They are just not going to be able to do it.

This puts in place a very, very simple, straightforward process that ought to give effect to what the government is saying is the intention behind the bill. Under this process, the employee who feels that they have been underpaid will be able to go to head office and make a claim. If it turns out, according to law, that they have been underpaid, then the head office pays them the difference. A 7-Eleven head office would have paid the people directly, as they said they would do when the scandal was brought to light. The head office can then turn around and claim the money back from the franchisee, but it then becomes a matter for them, and the worker is not left in the lurch. The worker is not left having to prove, as they may have to under this bill, who knew what and whether this was part of some overall coordination or not. No, if you work and get underpaid in a 7-Eleven store, and you do not get justice from your immediate employer, you can go to head office. Head office is obliged to pay you if the claim is proved legally, and then head office can turn around and recoup it.

This will do two things to give effect to the intent of this bill. The first thing it will do is allow vulnerable workers to actually get some justice. This process is not asking for the employees to get more than what they are entitled to. They will only get their legal entitlement out of this, but they will be able to get it. They will be able to get it because it is the head office—as the government has said in introducing this bill—that bears some responsibility. They will not be able to use the loopholes in this bill to get out of it. Head office will have to front up and then turn around and claim it from their franchisees.

The second thing that this will do is to minimise future exploitation, or the opportunities for future exploitation, because head office will now have an interest in not only checking whether the chewing gum is straight on the shelf and not only checking whether or not the posters are in the right place in the window but also in checking whether people are being paid properly. When—as we know they do, because we found out through the Senate inquiries—7-Eleven head office or any other head office of a franchise go in and do their regular store checks and audits, they will have an interest in auditing the wages books of the franchisees, because they will know that they might have to front up in the first instance and stump up the difference if there is an underpayment. It will create a culture of compliance. It will not leave the poor old vulnerable worker in the lurch, having to watch a fight take place between the franchisee and the head office.

What the amendments are also going to do is stamp out head offices of franchises putting small business franchisees in the invidious position Allan Fels found that 7-Eleven franchisees were in, where the only way they could make any money was by ripping off their workers. That is what Allan Fels said about the 7-Eleven arrangement. We are finding out that this arrangement is happening elsewhere, under names we walk past every day. What we are finding is that by using franchise contracts they are putting the subcontractor—the franchisee or small business—in the position sometimes where the only way the small business operator has any chance of making any money is by not complying with the law and not paying employees the appropriate amount.

These amendments would remove the incentive for that to happen. This does not just put the worker in a better position and ensure there is a culture of compliance; it puts the small business operator and the franchise in a better position because then they are not going to be put under these contracts where they are forced to underpay people's wages. That was a huge complaint that many 7-Eleven small business operators came forward with. They said, 'This is the only way we can make money because this is what we are being required to do.' This will remove any incentive for a head office to do that because they are going to have to stump up for some or all of the underpayment.

I can anticipate some of what the government might say about this. They might say, 'It's not the head office's responsibility.' If things are not the head office's responsibility, why are they introducing this bill at all? They are introducing this bill because people have been dragged, kicking and screaming, to recognise the injustice at the heart of this system at the moment that allows so many people to get underpaid. I say to the government: if you are going to do it, do it right. Do it in a way that will actually give some justice to these people. At the end of the day, I remind the government and the opposition that all this will do is allow a worker to get their legal minimum entitlement—no more, no less—and it will mean the operation itself has to argue amongst itself as to who is responsible.

Christian Porter (Pearce, Liberal Party, Minister for Social Services) Share this | Link to this | Hansard source

I thank the member for Melbourne for that contribution. Again, these are not amendments the government will be accepting. Amendments (1) to (3) in fact replicate matters raised in the Greens' Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees) Bill 2015, which is presently listed as not proceeding. What they do, in effect, would allow franchise workers to make underpayment claims directly against the franchisor rather than their employer, which is of course the franchisee. They then give the franchisor 14 days to settle the claim before court proceedings might be brought by the franchise worker, a union or the Fair Work Ombudsman for the recovery of the amount. The franchisor would, under the amendments, have a right to recover the amount from the responsible franchisee.

The reason the government is not accepting these amendments is that they would impose what could be described as a joint employer responsibility on both the franchisor and the franchisees. In other words, they would impose employment responsibilities on the franchisor and the franchisees in precisely the same way, where in truth there is only one employer in those relevant circumstances. The bill specifically recognises that franchisors and franchisees are separate entities and that they do have separate responsibilities. As employers, franchisees have a responsibility to meet their employment obligations under the Fair Work Act and remain responsible for their own wages bill. The franchisors are in a different position and they must take reasonable steps to prevent contravention they either know is occurring or ought reasonably to know is occurring. The government does not support imposing direct liability on franchisors for their franchisees' wages bill. The franchisors that take reasonable steps to prevent contraventions of the workplace law should not be subject to further regulation. That is, in essence, the reason we will not be supporting amendments (1) to (3).

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

I am disappointed, again, that I do not have the opposition's support for these amendments, because they are very sensible amendments. I hope that changes by the time we go to the Senate and deal with these.

I wonder if the minister could enlighten us, through you, Mr Deputy Speaker, about what 'reasonable steps' might mean. In the 7-Eleven instance, that was in fact the kind of defence that was used by the head office: 'We couldn't have known this. We had an arrangement with our subcontractors.' It is the defence that is regularly used in all of these cases of exploitation. It would seem to many of us who have been following this very closely that exactly what the minister just said about no liability being imposed on franchisors who take reasonable steps means this bill may well be null and void. It may well be of no effect. Could the minister illustrate, for example, whether he considers what happened at 7-Eleven or Caltex to have had reasonable steps taken? Were their actions such that they would fall foul of this provision and the head office would be directly liable?

Christian Porter (Pearce, Liberal Party, Minister for Social Services) Share this | Link to this | Hansard source

I am reminded of the famous dictum in criminal law matters on issues such as this. There is an evergreen truth in matters of the law that 'each case turns on its own circumstances'. What 'reasonable steps' might be would very much depend on the individual circumstances of the matter. The reasonable steps provision is triggered once it is confirmed that the franchisor knew that something was occurring or ought reasonably to have known. As the member for Melbourne would know, that is reasonable steps. The two triggering events—that they either knew or ought reasonably to have known that things were occurring—are very well versed and used legal phrases, but their meaning, of course, would depend on the relevant circumstances of the case.

Question negatived.

Bill agreed to.