The need for legislative change was sparked by increased community concern about the exploitation of vulnerable workers, particularly migrant workers, by employers.
In particular, an inquiry into 7-Eleven attracted significant public attention when it revealed the systematic underpayment of workers through a “cash back” practice. 7-Eleven franchisees would pay their employees a lawful rate and later coerce them to pay back a proportion of their wages. The inquiry revealed that this practice was, to a certain extent, aided by the 7-Eleven franchise business model. It has been reported that the agreement between the franchisor and franchisee was such that the franchisee could not be profitable without underpaying or overworking their employees.
The amendments to the Fair Work Act 2009 (Cth) (FW Act) are aimed at curbing unlawful practices such as these through increasing penalties, extending the chain of responsibility for contraventions of workplace laws to franchisors and holding companies, and equipping the Fair Work Ombudsman (FWO) with greater investigatory powers.
Despite their lobbying, a franchisor can now be held liable in circumstances where it exercised significant influence or control over the franchisee and did not take reasonable steps to prevent contraventions of workplace law before they occurred.
Similarly, a holding company can be liable if it has exercised significant influence or control over a subsidiary in circumstances where the holding company knew, or ought reasonably to have known, that the subsidiary wasn’t following workplace laws and it didn’t take reasonable steps to prevent the contravention.
A serious contravention occurs when a person or business knowingly contravenes a workplace law and the contravention was part of a systematic pattern of conduct affecting more than one person.
There was some concern that the penalties under the FW Act were too low to deter employers and that the cost associated with being “caught” was considered an acceptable cost of doing business.
Under the new provisions the maximum penalty for a serious contravention by an individual is significantly higher at $126,000 per contravention. The maximum penalty for a serious contravention by a company is $630,000 per contravention.
Increased penalties for breaches of record-keeping and pay slip obligations.
Increased penalties also apply to businesses that fail to maintain accurate records and fail to ensure that proper payslips are provided to employees. Employers who knowingly provide their employees with pay slips that are false or misleading will also face increased penalties.
Further, employers who do not meet their record-keeping obligations and cannot give a reasonable excuse for the failure will bear the onus of disproving wage claims in the event that the claim is before a court.
Liability for franchisors and holding companies
As mentioned above, the new provisions provide that franchisors and holding companies will be held responsible for underpayments by franchisees or subsidiaries where they knew, or ought reasonably to have known, of the contraventions and failed to take reasonable steps to prevent them.
In a similar vein, officers of the franchisor or holding company can be held liable as an accessory to a contravention by the franchisor or holding company.
Cash back schemes expressly prohibited
Employers are now expressly prohibited from unreasonably requiring their employees to pay them money. This is intended to capture the “cash back” practices that were employed by 7-Eleven franchisees.
Strengthening of the Fair Work Ombudsman’s powers
The evidence-gathering powers of the FWO have also been strengthened to ensure that the exploitation of vulnerable workers can be effectively investigated. The changes give the FWO new avenues to pursue employers and businesses that obstruct investigations by providing false or misleading information.
In a press release issued on 9 October 2017, Fair Work Ombudsman Natalie James said "We will apply the new laws judiciously and fairly but we will not hesitate to use them to the fullest extent to protect vulnerable workers, I encourage franchisors to be proactive in taking steps to promote compliance in their networks."
A recent study, has challenged the perception that vulnerable workers are underpaid because they are not aware of their entitlement to a minimum wage. The report confirmed that ‘”wage theft”, as it has been called, among Australia’s temporary migrant workers is endemic, but also found that the majority of workers surveyed (international students and backpackers) were aware that they were being underpaid.
The new provisions of the FW Act may go some way to protecting vulnerable workers. However, as this new study reveals, other factors, such as immigration-reporting threats, may prevent vulnerable employees from speaking out about unfair and unlawful employment practices.
 Senate Education and Employment References Committee, A National Disgrace: Exploitation of Temporary Work Visa Holders, 17 March 2016.
 Laurie Berg and Bassina Farbenblum, ‘Wage Theft in Australia: Findings of the National Temporary Migrant Worker Survey’ (Report, UNSW and UTS, 2017).