The government is getting serious about penalties for breach of federal legislation.

Employers should be aware that changes to penalty units in the Crimes Act 1914 will mean bigger penalties for breaches of Fair Work obligations.

From 28 December 2012, employers who breach the Fair Work Act 2009 (‘FWA’) will face penalties of up to $51,000 per breach (for a body corporate) or $10,200 (for individuals) after an increase to the penalty units in section 4AA of the Crimes Act 1914.  Evidently, this is a significant increase in comparison with the previous maximum penalties of $33,000 per breach for a body corporate or $6,600 per breach for an individual. 

What are penalty units?

A penalty unit is simply an amount of money used to calculate pecuniary penalties.  As of the 28 December 2012, the value of a penalty unit has risen from $110 to $170, marking the first increase in over 15 years. Breaches of legislative provisions are often assigned a certain number of penalty units, as is the case with offences under the FWA.  This means that a rise in the value of a penalty unit will cause an increase in the penalty payable by offenders.

Be aware

Though this change has no effect on employers’ obligations to employees under the FWA, you should be aware that breaches of legislative provisions and awards will incur heavier penalties than in the past.  The change acts as a reminder to employers to review employment conditions and procedures to ensure they comply with all provisions under the FWA.  No one wants a $51,000 fine!

Beyond the FWA

The FWA is not the only Act attracting penalty increases.  Changes to the value of penalty units in the Crimes Act will also affect the penalties for breach of the Trade Marks Act 1995 (‘TMA’).  The maximum penalty for offences under the TMA (for example, falsifying a registered Trade Mark) has now increased from $55,000 to $85,000.

The Australian Securities and Investments Commission (‘ASIC’) Act 2001 also uses penalty units and references value ascribed by the Crimes Act, so expect higher penalties for non-compliance with ASIC requirements.