In today's complex regulatory environment, automotive business owners face increasing challenges in managing workplace relations effectively, according to the Victorian Chamber of Automotive Commerce (VACC). Recent legislative changes and court decisions highlight the importance of maintaining proper employment practice to avoid significant penalties and legal disputes, says VACC executive manager workplace relations, Daniel Hodges.
Understanding the New 'Wage Theft' Legislation
“The new 'wage theft' laws that commenced on January 1, 2025 have dramatically changed the landscape for employers. These laws carry criminal sanctions for employers who intentionally engage in conduct resulting in employee underpayment. The legislation covers entitlements under the National Employment Standards (NES), modern awards, and enterprise agreements,” Hodges outlined in the April edition of the VACC’s magazine, Automotive (ital.).
“Under the 'serious contravention' provisions, employers deemed to have recklessly engaged in underpayment conduct could face penalties of up to $4.95 million (or three times the contravention amount). Significantly, these offences can apply to one-off incidents, including late payments, without needing to establish a pattern of systematic behaviour.”
The Crucial Role of Proper Disciplinary Procedures
Hodges cited recent tribunal decisions, such as Black v Gladstone Regional Council, explaining they have highlighted the consequences of failing to follow established disciplinary processes.
“In this case, an employer was ordered to reinstate an employee after it was determined they had failed to follow their own disciplinary procedures, rendering the dismissal unfair,” Hodges said.
He outlined that the Fair Work Commission considers several factors when determining whether a termination was unfair, including:
- Whether the employer followed their own procedures
- If the employee was allowed to respond to allegations meaningfully
- Whether the employee could seek advice or have a support person present
- If appropriate warnings were provided for performance-related issues
He said even when there is a valid reason for termination, failure to provide procedural fairness can expose your business to successful unfair dismissal claims.
Employment Contracts: Your First Line of Defence
Hodges points out that well-drafted employment contracts remain essential in establishing clear expectations and protecting your business.
“Common issues include employee misclassification according to skill level or employment status (full-time, part-time, or casual), which can result in incorrect payment of entitlements such as superannuation, leave, and other benefits.
“Automotive business owners should avoid taking a ‘one-size-fits-all’ approach to employment contracts. Templates found online often fail to account for industry-specific requirements and recent legislative changes, creating significant compliance risks.”
The Cost of Non-Compliance
Hodges says the financial impact of non-compliance can be devastating for small automotive businesses operating on tight margins.
“Beyond the substantial penalties mentioned above, businesses face additional costs, including back-payment obligations, legal fees, administrative burdens, and potential damage to reputation within the local community and industry,” he said.
“Many small operators have been forced to close their doors after failing to address these compliance issues proactively.”
Proactive Steps for Automotive Business Owners
To protect your business in this changing environment, VACC recommends implementing systems to ensure:
- Thorough knowledge of applicable award provisions and legislative entitlements
- Properly trained payroll staff with regular refresher training
- Timely processing of completed timesheets before pay runs
- Regular payroll audits
- Properly drafted employment contracts that are periodically reviewed
For assistance and further information, automotive businesses in Victoria should contact the VACC Workplace Relations team at ir@vacc.com.au or 03 9829 1123. Those in other states should contact their local Motor Trades Association (MTA).