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Enforcement outcomes

We use our statutory enforcement tools for cases of serious or widespread non-compliance and for matters in the public interest. This involves an assessment of whether any proposed compliance activity would be an efficient and ethical use of public resources. We also consider our strategic priorities as part of our approach.

Examples of where we may use our enforcement tools include:

  • blatant disregard of the law
  • the exploitation of vulnerable workers
  • systemic issues of non-compliance, where there is a need for specific deterrence.

In mid-2019, we reviewed and updated our Compliance and Enforcement Policy, which resulted in an increased use of most of our compliance and enforcement tools in 2019–20.

We used our enforcement tools in 1621 cases, an 85% increase from the previous year. This figure includes:

  • infringement notices
  • compliance notices
  • court enforceable undertakings
  • litigations.

Additionally, we wrote to 105 employers, formally cautioning them to correct compliance issues we identified.

Enforcement outcomes, 2018–20

Enforcement outcome

2019–20

2018–19

Infringement notices issued

603

563

Compliance notices issued

952

274

Enforceable undertakings executed

12

17

Litigations commenced

54

23

Infringement notices

Infringement notices are on-the-spot fines we issue to employers for breaching record-keeping and payslip requirements. Before issuing a notice, we consider:

  • the employer's previous compliance history
  • the degree to which their lack of record-keeping impacts our ability to find, calculate and recover entitlements.

In 2019–20, we issued 603 infringement notices, with payments totalling $891,173.

Compliance notices

Compliance notices require a person to take specific action to fix alleged breaches of the Fair Work Act. We can issue a notice if we form a reasonable belief that a person or business has contravened workplace laws.

Compliance notices are an efficient tool for addressing and rectifying suspected breaches and ensuring underpaid wages are quickly back-paid to employees.

As part of our revised compliance and enforcement posture, we transitioned to an increased use of compliance notices in 2019–20. This followed careful consideration of:

  • an internal capability review
  • findings of the Banking Royal Commission
  • the Migrant Workers’ Taskforce Report, in which the Chair’s overview specifically recommended the FWO make greater use of compliance notices.

Compliance notices are now our primary enforcement tool to respond to underpayment matters, with the exception of complex, deliberate or serious cases of non-compliance. Our increased use is consistent with the FWO’s obligation to efficiently and effectively perform our statutory functions.

In 2019–20, we issued 952 compliance notices and recovered more than $7.8 million in unpaid wages – more than 3 times the number of compliance notices (274) and nearly 8 times the amount of wages recovered compared with the 2018—19 financial year.

We take non-compliance of compliance notices seriously. If a person or business fails to comply with a compliance notice in accordance with the statutory requirements, we will take court action to enforce it. In 2019–20, we commenced a number of proceedings against parties who failed to comply with compliance notices. See Litigation for more information.

Enforceable undertakings

Enforceable undertakings (EU) are court-enforceable, legally binding arrangements, where employers admit liability, express contrition, and agree to fix any breaches and commit to ongoing compliance.

EUs can deliver outcomes that are not available via other enforcement tools. For example, our EUs often require the employer to, as a minimum:

  • pay interest on outstanding wages and entitlements
  • ensure payroll managers are properly trained
  • commission independent payroll audits for the life of the EU, paid for by the business
  • establish processes and procedures to achieve ongoing compliance, such as staff training and new payroll systems.

In 2019–20, we entered into 12 EUs, 9 of which related to self-reported non-compliance from large employers. We recovered a total of over $56.8 million in back-payments from our EUs. For more information on our activities relating to self-reported non-compliance, see Large corporate underpayments.

We also commenced one litigation against an employer for failing to comply with the terms of an EU. See Litigation for more information.

Copies of the FWO’s EUs are publicly available on our website, to ensure transparency and serve as a deterrent for non-compliance.

Litigation

We reserve litigation for serious cases of non-compliance and misconduct, and in cases where we believe it will have the most impact. For example, we may litigate in matters involving:

  • a deliberate and/or repeated breach of workplace laws
  • exploitation of vulnerable workers
  • failure to cooperate with us and fix contraventions after being given the opportunity to do so
  • parties who have a prior history of contraventions who have not taken adequate steps to ensure compliance despite being advised of consequences in the past.

In 2019–20, we initiated 54 litigations, a 135% increase from the previous year. We also achieved $4,348,778 in court-ordered penalties ($2,942,069 against companies, $1,315,809 against individuals and $90,900 against unions).

We achieved a number of significant litigation outcomes in matters where there was a high level of public interest.

New record for highest total penalties ordered

We achieved a new record for the highest total combined penalties in 2019–20, with total penalties of $891,000 ordered in the matter Fair Work Ombudsman v HSCC Pty Ltd & Ors. The case involved 3 sushi outlets, as well as their owners and payroll officers, who underpaid 94 employees over $700,000 between 2015 and 2016.

The Federal Court found that the employees, many of whom were young overseas workers, were paid flat rates as low as $12 an hour to its casual employees, inadequate fortnightly wages to its full-time employees, and no additional amounts for penalties, overtime or leave.

The operators also provided Fair Work Inspectors with hundreds of pages of false or misleading records on a number of occasions throughout our investigation, illustrating the deliberateness of their breaches.

First penalty judgment under Protecting Vulnerable Worker provisions

We achieved our first penalty decision in a matter filed under the provisions provided for under the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 in the matter of FWO v A&K Property Services Pty Ltd and Ors. This was the first case where we relied on the reverse onus of proof provision that was introduced as part of the amendments.

The company, A&K, trading as Sushi 79, operated 2 sushi stores, and had failed to make or keep employee records and issue pay slips, without providing a reasonable excuse for doing so. They also underpaid 9 employees (all visa holders) a total of nearly $20,000 in wages and $7,416 in superannuation.

The company and its directors were penalised a total of $125,700 for their underpayments and record-keeping and payslip breaches.

Discrimination cases

We also secured penalties against businesses in 2 separate cases involving discrimination.

In the first case, $104,000 in penalties were ordered against the operators of a Crust Gourmet Pizza franchise outlet, after it discriminated against 4 migrant workers by paying them much less than Australian employees. The migrant workers were paid a flat hourly rate of $12 for all hours worked, and were not paid any penalty rates. In contrast, the Australian employees were paid more than $18 an hour and received penalty rates of up to $46.31 an hour.

In the second case, a restaurant and its director were penalised $44,800 by the Federal Court for taking adverse action against a pregnant employee. The company and director admitted to reducing and cancelling the employee’s shifts, for reasons that included her pregnancy. The director further admitted to directing a supervisor to send the employee home during a shift because ‘she looks disgusting’. The penalties included $7,000 compensation ordered to the employee.

Recidivist employers

We will continue to litigate against employers who repeatedly and consistently breach workplace laws. This includes employers who continue to breach the law after entering into a court-enforceable undertaking with us.

In 2019–20, we secured $398,520 in penalties against a travel agency, Abella Travel, and one of its directors for underpaying 2 migrant workers in an illegal cash-back scheme, despite having previously entered into a court-enforceable undertaking with the FWO in 2014 to rectify unrelated workplace breaches.

In another case, we secured penalties of $151,200 against a plumber and his company for deliberately underpaying a young worker and falsifying records. The FWO had previously litigated against the employer and company for similar underpayment breaches. This brought the total penalties for both cases to over $270,000. In addition to the penalties, the company must also notify the FWO if they employ any worker on an apprenticeship over the next 2 years.

Priority sectors and cohorts

We achieved significant litigation outcomes in our priority sectors, including the fast food, restaurants and cafés sector, and for vulnerable workers.

We secured $307,802 in penalties against 3 PappaRich franchise restaurants in Sydney, for underpaying 154 employees (including visa and migrant workers) a total of $74,000. The companies and manager-operator were also found to have breached laws relating to annual and personal leave entitlements, record-keeping and payslip requirements.

In another case, we secured penalties of $209,000 against a restaurant owner, his 2 companies and his in-house accountant, who had underpaid their mostly migrant and young workers over $30,000 in total.

We also successfully litigated against a construction company and its director, for underpaying 2 young apprentices over $30,000. The apprentices, aged 17 to 20 during the course of their employment, worked 6 days a week between 2013 and 2015, and were not paid their minimum entitlements under the relevant award. The director also refused to pay one apprentice for 11 weeks of work after the employee took 2 days of personal leave. The company and director were penalised $177,174 for their breaches of the Fair Work Act.

Non-compliance with a compliance notice

While the vast majority of employers comply with our compliance notices, in instances where they don’t, we will take court action to enforce it.

In one example, we issued a compliance notice to an employer in July 20191, in respect of suspected underpayments to an employee. When they failed to rectify these underpayments within the timeframe given, we initiated legal proceedings against them. Shortly after, the respondents admitted to the contraventions and took the action required by the initial compliance notice. In addition to rectifying the underpayments as required by the notice, they were issued court-ordered penalties of over $8,000, for failing to comply with a compliance notice.

In another case, we issued a compliance notice against a company for underpaying a former employee over $15,000. After the company failed to comply with the notice, we commenced legal proceedings against them. The Federal Circuit Court ordered the company to pay back the underpayment, plus superannuation and ordered penalties of over $26,000 against the company and an accessory for failing to comply with the notice.

Gender equity in briefings

In 2019–20, we remained committed to the Law Council of Australia’s Equitable Briefing Policy, which aims to improve gender equality in the number of briefs issued to barristers across the country. In 2019–20, the FWO briefed female counsel 41 times (63%) and male counsel 24 times (37%).

Footnotes

  1. FWO v ASGBRIS Pty Ltd & Stephen Ward