A key question I asked when I took up the appointment of Australia’s Fair Work Ombudsman in mid-July 2018, was whether the agency has the right capability to discharge its functions effectively. I commissioned an independent capability review of the agency.
In response to the recommendations from the review, we reaffirmed our purpose under the Fair Work Act 2009 (Fair Work Act), announced annual compliance and enforcement priorities underpinned by strengthened policy and implementation governance, and established new corporate governance arrangements in consultation with our Audit and Risk Committee.
Australian workplaces are changing, as are the community’s expectations of its regulators. There is now much greater community awareness about the need to uphold standards across the whole labour market. This is evident from the findings of the Banking Royal Commission and the Migrant Workers’ Taskforce, which urged regulators to take a firmer stance and use all their regulatory tools, particularly where vulnerable members of the community are involved.In 2018–19, our intelligence-led approach to education and compliance activities resulted in recoveries of over $40 million for nearly 18,000 workers. We conducted over 2800 workplace audits nationally, with our proactive investigations strategically targeting sectors at high risk of non-compliance.
The courts also imposed penalties of $4.4 million as a result of our litigation action during the year. This included $383,616 in combined penalties against the operators of three sushi outlets in regional NSW, for underpaying vulnerable employees over $70,000.
Firm but fair approach to non-compliance
It’s a fact that mistakes happen, and this can lead to underpayments. However, the onus is on the employer to comply with workplace laws, and immediately rectify any issues that arise.
Under our new Compliance and Enforcement Policy, I announced that we would increase our use of compliance notices. Fair Work Inspectors issue compliance notices if they reasonably believe an employer has breached workplace laws. If the breach isn’t fixed, we won’t resile from taking the matter to court.
Compliance notices are an important tool for us in addressing and rectifying alleged breaches expeditiously. In 2018–19, we recovered more than $1 million in unpaid wages through 274 compliance notices.
We have seen an increase in self-reporting of underpayments to us, mainly from businesses with large workforces and complex payroll errors. I welcome self-disclosures, as they suggest our compliance and enforcement activities are creating the desired deterrence effect.
Where companies self-disclose, the Fair Work Ombudsman (FWO) will consider all appropriate enforcement options, and litigation may still be the most appropriate for serious non-compliance and/or late or incomplete disclosure.
We expect non-compliant employers, as a minimum, to enter into a court enforceable undertaking (EU) and immediately pay back money plus interest owed to workers. We also expect them to pay for ongoing independent audits of their payroll, with FWO oversight, to ensure underpayments don’t happen again. Companies that do not comply with the EU and companies that do not work cooperatively with us can expect litigation. Consistent with open and transparent governance, FWO will publish all EUs on our website.
The flow-on effect of requiring employers to take responsibility, in this way, is that we can direct our finite resources to serious matters or industries with systemic problems.
We are charged with regulating nearly 13 million workers1 and over 2 million businesses.2 This makes an intelligence-led and risk-based approach critical for determining our priorities and the most effective ways to make an impact on key sectors of the economy.
Intelligence, data and experience show that non-compliance rates remain high in the fast food, restaurants and cafes sector. It’s the highest ranked industry group for disputes across the last five financial years.
Our Harvest Trail Inquiry also found widespread non-compliance in the horticulture industry, where labour hire and supply chain issues are rife. This activity recovered more than $1 million in unpaid wages for over 2500 horticulture workers. We note the effort by key stakeholders in continuing to work with us in implementing the recommendations in the report to address the issues identified.
These industries remain a priority for us. We are considering all options for driving sustainable behavioural change, including education, compliance and enforcement, and raising consumer awareness to help people make informed purchasing decisions.
Advice, education and assistance
While we are taking a more transparent and consistent approach to compliance and enforcement using all the tools available to us under the Fair Work Act, we also have a critical role under the Act to educate and advise employers, workers and the community about workplace rights and legal obligations.
I’m extremely proud of the work that our frontline staff do every day, resolving workplace disputes through education, advice and assistance. Nearly $30 million was returned to underpaid workers through assisted dispute resolution and our Infoline answered more than 380,000 calls.
Our online channels and resources continue to grow in popularity. There were nearly 18 million visits to our website. Our new tools and resources received positive feedback and engagement. We provided advice and assistance to more people through our social media channels and online portal. And the community lodged more anonymous reports of suspected non-compliance.
Protecting vulnerable workers
Increased powers and additional resources are enabling us to send a strong message of deterrence to would-be lawbreakers.3 In the past year, we have filed five Protecting Vulnerable Workers Act matters before the courts.
These matters involve allegations of false and misleading information being provided to a Fair Work Inspector4, and one matter where we successfully used the ‘reverse onus’ provisions for failure to keep records or issue payslips.5 Our most recent matter involves allegations of ‘serious contraventions’ and is the first where we have sought the new higher penalties, with maximums up to ten times higher than normal.6
In addition, the Government agreed in principle to all recommendations in the Report of the Migrant Workers’ Taskforce7, which the FWO supports, including through the development of key information and resources to assist this highly vulnerable group.
In June, I was pleased to announce our 2019–20 Compliance and Enforcement Priorities. We will use the priorities to drive our proactive compliance and enforcement decisions and provide guidance to the community on our key areas of focus.
We will continue to focus on matters that are of significant public interest, demonstrate a blatant disregard for the law, are of a significant scale or impact on workers or the community, or where we can test the law or use new laws.
It is my intention to review our priorities at the end of each year and refine them if necessary. Through this process, the views of stakeholders will be carefully considered. I look forward to engaging in this regard to promote harmonious, productive, cooperative and compliant workplace relations in Australia.
Fair Work Ombudsman
Australian Bureau of Statistics (ABS) Labour Force, Aug 2019, cat. No. 6202.0 ↩
Australian Bureau of Statistics (ABS) Counts of Australian Businesses, including Entries and Exits, June 2014 to June 2018, cat. No. 8165.0 ↩
Employers now face penalties of $630,000 for a company and $126,000 for an individual per serious contravention. ↩
Fair Work Ombudsman v Desire Food Pty Ltd & Chern Ming Lee; Fair Work Ombudsman v Pulis Plumbing Pty Ltd & Anor; and Fair Work Ombudsman v China Bar Buffet (Epping) Pty Ltd & Ors. ↩
Fair Work Ombudsman v A & K Property Services Pty Ltd & Ors. ↩