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From our teamSeptember 22, 2017
As a workplace relations adviser, I regularly assist a number of employers as they undergo an audit by the Fair Work Ombudsman (FWO). Many of these clients have been under significant stress and anxiety at the thought of being found to be non-compliant with workplace laws. To add to this stress, the recent passing of the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (the Bill) to amend the Fair Work Act, has brought sweeping changes to the way businesses manage workplace relations regardless of their size.
While my role doesn’t change day to day, there continues to be frequent and significant changes to workplace laws and regulations across Australia that make it vital to keep in regular contact with clients as changes come to hand.
The FWO is an independent body created by the Fair Work Act 2009 (the Act) to regulate and enforce employment conditions in workplaces.
The FWO has the power to audit employers, direct them to produce employee records (such as payslips), issue infringements where deemed there has been a breach, and to prosecute employers in court for breaches of the Act, regulations and/or industrial instruments. The FWO can act on anonymous tip offs, employee complaints or choose businesses at random to audit. A recent example of this is the unannounced auditing of restaurants and cafes in Melbourne and the joint operation in Queensland between the FWO and police.
The FWO seem to be prosecuting more and more employers for not getting pays right over a period of time. This is known as “systematic underpayment” and has been featured in the news a lot this year. With higher penalties being awarded in the Courts than ever before, it seems that they’re getting strong results.
Vulnerable workers are those that have a trait, or traits, which provide them with limited bargaining power. Common examples include employees with a poor understanding of English and those on employer sponsored visas. Particular industries such as hospitality, farming, contract cleaning, hair and beauty, and manufacturing tend to have a higher rate of these kinds of employees and are at most risk of being audited by the FWO.
One of the highest profile cases of vulnerable workers being poorly treated remains the 7-Eleven example. The Court imposed penalties against 7-Eleven operators across Australia have now topped $1 million following action from the FWO. Initially, these systematic underpayments were picked up through employee complaints and audits initiated in 2014. So far the FWO have filed at least 7 actions before the Federal Circuit Court, some of which have been completed.
While the 7-Eleven cases serve as a warning for employers everywhere, it is worth noting businesses were hit with such high penalties because the franchisee had actively attempted to impede the FWO’s investigations to conceal the extent of the underpayments. The decisions were then handed down based on the employers intentionally taking advantage of a vulnerable workforce, mainly foreign workers unfamiliar with what they should have been paid.
The largest ever penalties awarded through an investigation by the FWO occurred in August this year with a Melbourne based fruit market having to pay a total $660,020 in penalties for deliberately underpaying or not paying employees at all. In this case, the focus was on an Afghani refugee worker.
The Bill amends the Act and seeks to implement changes to protect vulnerable workers. It was passed by the Parliament earlier this month, and will come into effect in the next few months.
There is arguably a strong connection to the prosecutions by the FWO and the introduction of this Bill into parliament. While this Bill had franchisees as its initial target, the higher penalties and strengthened powers of the FWO will be on the cards for every business in every sector. In conclusion, the key takeout is that employers must be proactive and savvy on workplace laws surrounding minimum wages and record keeping.
I advise clients every day on how important it is to have accurate record keeping and sound advice on what to pay employees. Knowing how to deal with the FWO and ensuring compliance with the legislation is always the best protection.