The 2019 Australian Budget is introducing funding to target sham contracting and a labour hire registration program. These initiatives are in part addressing recommendations made in the Migrant Worker’s Taskforce Report issued in March 2019.
Sham Contracting Crackdown Unit
The Government has announced that from 2019-20 it will provide the Fair Work Ombudsman (FWO) with $9.2 million over four years to create a sham contracting unit, with a further $2.3 million in funding each year.
This is aimed at employers engaging in ‘sham contracting behaviour’, described as those who:
“knowingly or recklessly misrepresent employment relationships as independent contracts to avoid statutory obligations and employment entitlements”.
The unit intends to educate and increase compliance and enforcement around sham contracting, also assigning funding to investigation and litigation.
National Labour Hire Scheme
An additional $19.8 million in funding was also included for the FWO to help create a national labour hire registration scheme.
The intention of this new scheme is to enhance the FWO’s ability to investigate underpayments, to implement more pre-registration requirements for labour hire companies and to introduce other regulations to promote transparency and “reduce worker exploitation and drive behavioural change in the industry”.
High-risk sectors will be mandatorily required to register including cleaning; horticulture; meat processing; and security industries.
Superannuation Guarantee Taskforce
The Budget 2019 also announced it would continue funding the Australian Taxation Office (ATO) for the establishment of the Superannuation Guarantee Taskforce enabling the ATO to issue criminal penalties for employers refusing to pay superannuation.
Impact on Employers
The employment related funding in this year’s Budget is directed at promoting employee protection and will require stricter compliance from employers.
The budget papers stated, “this will raise vulnerable workers’ awareness of their rights and of the government help available to them, and will also raise employers’ awareness of their responsibilities under workplace laws”.
If you have any questions about how these schemes may affect your company, please do not hesitate to contact Nick Stevens, Jane Murray or Angharad Owens-Strauss.