Fair Work Act

The Fair Work Act – Impact of Penalty Increases

The start of this financial year saw the maximum penalty for breaches of the Fair Work Act 2009 (Cth) rise for both individuals and corporations. For individuals, the figure has risen from $10,200 to $10,800. For corporations, the maximum penalty is now $54,000 from $51,000.

Considering that there has been a trend towards naming individuals as well as companies in adverse action claims, the increase to the maximum penalties is bound to have widespread effects.

Who will be affected by the Fair Work Act penalty increase?

The people who are typically involved in adverse action claims against individuals include human resource managers, line managers, general counsel and directors or officers of the company involved.

The change to the maximum penalty is a direct result of changes made to penalty units for breaches against the Crimes Act 1914 (Cth) from $170 to $180, with the value now automatically adjusting for inflation every three years.

Civil penalties for contraventions of the Fair Work Act are applied for breaches of:

  • National Employment Standards
  • Enterprise agreements
  • Modern awards
  • Bullying and discrimination in the workplace
  • Right of entry
  • General protections provisions
  • Orders relating to unlawful industrial action

A breach of any of the above provisions has a maximum 300 penalty units for corporate bodies and 60 for individuals.

With the new maximum penalty being increased, this means that if an employee claims adverse action against an employer and three managers, the total maximum penalty is now $86,400, with $54,000 for the corporation and $10,800 for each of the managers.

When do the new penalties start?

The new penalties came into effect on 31 July 2015. That means that every offence that occurs after this date will have the new penalty unit rate applied. For offences that occurred before this date, the old penalty rates will still apply. The new rates are subject to change with inflation every three years, so this rate will be up for review on 31 July 2018.

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