2019–20 Compliance and enforcement priorities
In mid-2019, the FWO publicly announced its compliance and enforcement priorities for 2019–20:
- fast food, restaurants and cafes (FRAC)
- horticulture and the Harvest Trail
- supply chain risks
- sham contracting.
These specific priorities were determined after an analysis of operational data, intelligence and experience. In addition, we continue to prioritise matters that involve vulnerable workers, are of significant public interest or scale, demonstrate blatant disregard for the law, or present an opportunity to test the law.
Our 2019–20 compliance and enforcement priorities guided our investigations and activities for the financial year, allowing us to strategically focus our resources on issues and sectors that our intelligence indicates as having the highest risk of non-compliance.
Our priorities were also designed to allow us to continue to monitor compliance more broadly and take action where needed, including on emerging issues such as large corporations self-reporting non-compliance of workplace laws.
Investigations in response to requests for assistance
In 2019–20, we conducted 2370 investigations into more complex or significant matters (involving vulnerable workers, serious non-compliance and /or uncooperative employers), in response to requests for assistance involving a workplace dispute. From these investigations, we recovered over $5.8 million in underpayments.
Our compliance activities target priority industries, geographic regions and businesses with high and systemic levels of non-compliance.
These compliance activities allow us to:
- verify our intelligence by targeting priority industries, sectors and businesses that our intelligence indicates are at high-risk of non-compliance
- better understand the drivers of non-compliance
- provide targeted education, information and advice to non-compliant businesses
- develop strategies for sustained behaviour change
- recover wages for underpaid employees.
In 2019–20, as part of our compliance activities, we investigated 1432 workplaces and recovered $7,843,790 in unpaid wages.
Key compliance activities for the 2019–20 year included a series of compliance activities involving popular food precinct areas, including conducting surprise audits of a number of bars in Melbourne’s popular Chapel Street district, in response to allegations (including enquiries and anonymous reports) that workers at venues in the area were being underpaid and not receiving entitlements such as overtime and penalty rates. For more information on these activities, see Fast food, restaurants and cafes.
The overall non-compliance rate for our audits for the year was 71%, with the most common contraventions relating to:
- hourly rate underpayments (12%)
- failure to provide payslips in their prescribed form (9%)
- penalty rates for weekend work (9%).
Compliance and contravention rates for targeted audits do not necessarily indicate general rates of compliance across all Australian workplaces. FWO compliance activities are targeted at industries or geographic areas where compliance risks are present.
Our Anonymous Report tool lets members of the community notify us if they suspect a business or individual is breaching workplace laws.
The data we collect from anonymous reports, combined with other operational data and research, helps to inform and improve our targeting for compliance activities. For example, our compliance activities into 50 businesses in Brisbane’s West End food district was in response to receiving over 100 anonymous reports about restaurants and fast food outlets in the area.
The tool is available in 16 languages (in addition to English). This enables more migrant workers, one of our most vulnerable cohorts, to report workplace issues anonymously to us in their language.
In 2019–20, we received 19,345 anonymous reports. This was a 17% increase from the previous year and the highest number of reports we’ve received in a financial year since the tool launched in 2016. Of these reports, 1085 were in languages other than English.
In line with previous years, we continued to receive the most reports from the hospitality industry (including fast food, restaurants and cafes), accounting for 34% of all reports received in 2019–20. The next highest industries were retail (13%) and building and construction (5%).
The top languages to make reports in languages other than English were:
- Simplified Chinese (26%)
- Traditional Chinese (20%)
- Korean (17%)
- Japanese (10%).
We received the most in-language anonymous reports from the hospitality industry, totalling 39% of all in-language reports. This was followed by:
- food manufacturing and processing (12%)
- agriculture (10%)
- retail (6%).
Fast food, restaurants and cafes
The fast food, restaurants and cafes (FRAC) sector is one of the FWO’s key compliance and enforcement priorities, due to both its disproportionately high levels of non-compliance and its vulnerable workforce. While only accounting for approximately 5% of employed persons, the hospitality industry has consistently had the highest number of disputes we’ve assisted with for the last 6 financial years.
The hospitality industry made up a third (34%) of all anonymous reports we received in the 2019–20 financial year (nearly 3 times more than the second-highest industry, retail). Within this industry, the highest rates of non-compliance are found in the FRAC sector. In 2019–20, this sector alone accounted for 50% of our total litigations initiated.
Our ongoing FRAC Strategy, which we launched in the 2018–19 financial year, seeks to address the systemic non-compliance in this sector. Our strategy employs a multi-pronged approach, including engagement, education and compliance activities, to improve compliance levels in this sector.
As part of the strategy, we delivered a communications campaign between November and December 2019 to raise awareness of the workplace rights and responsibilities of employees and employers in the FRAC sector. The campaign included social media promotion (on Facebook and Instagram), and digital display and Google search advertising. The campaign messaging was seen over 6.3 million times across all platforms, with over 19,000 click-throughs to the FRAC-specific resources on our website. For more information on these resources, see Online services.
We also continued to conduct a number of compliance activities that targeted popular food precincts and FRAC franchises around Australia. This included surprise audits of:
- 50 bars, restaurants and cafes in Brisbane’s West End food district
- 50 fast food, restaurant and cafes in food precincts around inner-Hobart, including North Hobart, Salamanca and Constitution Dock
- 17 Top Juice outlets in Victoria, New South Wales, Queensland and the ACT
- a number of bars that form part of the La La Bar Group in Melbourne’s popular Chapel Street district.
We also finalised a range of compliance activities and enforcement outcomes against non-compliant FRAC businesses in 2019–20. Some key examples include:
- finalising outcomes for 2 separate food precinct activities, which involved auditing a combined total of 249 businesses around the country. The activities:
- found non-compliance rates of 75% (activity one) and 86% (activity two) among FRAC businesses, respectively
- recovered a total of $733,137 for 1091 employees
- resulted in issuing 85 infringement notices, 55 compliance notices and the initiation of 1 litigation
- finalising outcomes in our Gami Chicken & Beer compliance activity, which audited 19 franchise outlets across Victoria, New South Wales and Western Australia in 2019. The activity:
- found a non-compliance rate of 100% for the 19 outlets audited
- recovered $233,087 for 353 employees
- resulted in the issuing of 9 infringement notices and 18 compliance notices.
In 2019–20, we accepted court-enforceable undertakings from 4 businesses in the fast food, restaurants and cafes sector, including MADE Establishment and MOS Burger. We further initiated 27 litigations and secured a total of $1,877,162 in court-ordered penalties against non-compliant companies, business owners and their accessories, including the largest aggregate penalty the FWO has secured to date. For more information about these cases, see Enforcement outcomes.
The horticulture industry has a number of characteristics that, based on our operational data and intelligence, makes the sector at high risk of non-compliance. These include:
- the nature of the work (often low-skilled and seasonal)
- the way labour is procured
- the type of people seeking work (often visa-holders looking to meet visa requirements).
Our Harvest Trail Inquiry Report (November 2018) informed our Horticulture Strategy, which we continued to implement in 2019–20. The aim of the strategy is to build a culture of compliance in the horticulture and viticulture sectors, based on engagement, education and enforcement activities.
A key part of the strategy involved the launch of our digital Horticulture showcase in September 2019. The showcase provides industry-specific information, tailored resources and self-help tools to employers and employees in this industry. For more information on the showcase, see Online services.
We ran a number of communications campaigns to educate employers and employees in the horticulture industry. The first and largest campaign coincided with the launch of the showcase and ran from September to October 2019. Activities included social media promotion (on Facebook and Instagram), as well as digital display and programmatic video advertising. The campaign messaging was seen over 6.7 million times across all platforms.
We ran 2 further social media campaigns in June 2020. The first campaign promoted the showcase’s translator function to migrant and overseas workers. The second campaign involved an educational video about supply chains and accessorial liability, aimed at employers, growers and contractors in the industry.
Further horticulture education and engagement activities we’ve executed in 2019–20 include:
- leading 4 ‘Awards in Action’ forums in key growing regions (Bundaberg, the Lockyer Valley, Shepparton and Coffs Harbour) to engage with industry participants on key issues in this sector. Attendees included local growers, employer associations and labour hire operators. The insights and learnings from these forums will be used to inform existing and future resources for the industry
- the creation of an interactive piecework agreement template that allows growers to quickly and easily create personalised piecework agreements
- presenting at the Harvest Trail Services Providers webinar forum, which aims to link workers with seasonal harvest jobs to meet seasonal peaks across Australia.
Another key element of the Horticulture Strategy is working with stakeholders to build a culture of compliance in the sector and enhance the frameworks that govern the industry. To this end, we:
- worked closely with an external Industry Reference Group, comprised of major employer and employee organisations, retailers and growers, who provided their expertise and industry knowledge on the sector
- continued to support the Pacific Labour Scheme and Seasonal Worker Programme, by providing educative resources and advice to seasonal workers and participants
- contributed to a Regional Agriculture Migration Cabinet Submission to address labour shortages in regional areas
- discussed and shared the horticulture sector's concerns about the COVID-19 pandemic with relevant departments, including the Department of Home Affairs, the Department of Agriculture, Water and the Environment and the Department of Foreign Affairs and Trade.
In 2019–20, we also conducted a number of compliance activities in relation to the horticulture industry, including:
- compliance activities in key regions, such as Moreton Bay and Wide Bay
- a revisit of non-compliant employers on the Harvest Trail
- monitoring of the Seasonal Worker Programme.
Supply chain risks
Breaches of workplace laws are more likely to occur when a business engages in multiple levels of subcontracting and without having processes in place to monitor or manage their labour supply chains. Where systemic issues of non-compliance occur, they usually involve vulnerable workers performing low-skilled work. This is why supply chain risks was one of the FWO’s priorities in 2019–20.
Companies at the top of a supply chain have a responsibility to ensure that their networks are not engaging in unlawful conduct. We have a number of resources to assist them to do so. This includes a dedicated section on our website for contracting labour and supply chains, and downloadable resources and guides. Over the financial year, these resources were collectively viewed over 34,000 times.
We also launched our Horticulture Showcase in September 2019, which provided horticulture-specific guidance on managing and achieving compliance in labour supply chains. For more information on the showcase, see Online services.
We ran 2 separate digital communications campaigns in June 2020 to raise awareness of compliance within supply chains. The first targeted the cleaning industry and was promoted through social media (Facebook and LinkedIn), Google search and digital display advertising. It was seen 7.3 million times across all channels. The second provided advice to employers, growers and contractors about supply chains in the horticulture industry, and was promoted through social media (Facebook and LinkedIn). It was seen 3.7 million times.
We also continued to support and encourage businesses at the top of their supply chains to promote a culture of compliance within their network and participated in industry-driven initiatives aimed at fostering sustainable, long-term culture changes. Key activities for 2019–20 included:
- participating in and supporting the Cleaning Accountability Framework — a multi-stakeholder industry-led initiative that seeks to improve labour and cleaning standards in Australia through a supply chain certification scheme
- continuing our compliance partnerships with United Trolley Collections (UTC), Australia’s largest trolley collection company, in relation to their trolley collection supply chain; and Woolworths Group Limited in relation to their trolley and cleaning services supply chain. Under the terms of these partnerships, UTC and Woolworths have committed to a range of measures aimed at improving workplace compliance in their networks, including regularly reporting to the FWO
- supporting Growcom’s Fair Farms initiative by providing funding through our Community Engagement Grants Program. The initiative, which was officially launched in 2019, supports ethical employment practices in Australia’s horticulture industry, providing growers with tools and information to implement employment practices that comply with workplace relations law
- continuing our partnership with the Australian Security Industry Association Limited (ASIAL) through a memorandum of understanding. The FWO meets regularly with ASIAL to share insights about the security industry and workplace issues. We’ve also presented at a number of briefings and contributed to a range of their resources.
As a result of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017, franchisors can now be held legally responsible if their franchisees don’t comply with workplace laws, unless they have taken reasonable steps to ensure compliance in their networks. What counts as reasonable steps will depend on a number of factors, including:
- the size and resources of the franchisor
- steps taken to support or train franchisees to comply with workplace laws
- whether there were procedures in place for handling complaints about possible breaches of workplace laws in the franchise
- whether the franchisor had any arrangements in place to monitor or assess the franchisee's compliance with workplace laws.
In 2019–20, 10% of all anonymous reports the FWO received related to franchises. Of these, the vast majority came from the hospitality (52%) and retail (29%) industries.
We have a range of resources to help franchisors and franchisees understand their workplace obligations and comply with workplace laws, including guides and dedicated web pages. In the last financial year, these resources were collectively viewed over 21,000 times.
To further promote our resources and raise awareness of the importance of workplace compliance in franchise networks, we ran a communications campaign in December 2019. Activities included social media promotion (Facebook and LinkedIn), digital display advertising and Google search advertising. The campaign messaging was seen nearly 7 million times across all platforms.
In 2019–20, we entered into a court-enforceable undertaking with MOS Burger Australia, a fast food franchise operating in Queensland. As part of the undertaking, we recovered $1.12 million in underpayments for 285 former and current workers across 6 stores.
We also finalised the outcomes of a compliance and enforcement activity into emerging fast food, restaurant and café franchises. The activity audited 76 businesses across 7 franchises that have recently commenced operations in Australia - Chatime, GongCha, Hot Star Chicken, PappaRich, Sushi Izu, Nene Chicken and The Sushi 79. These franchises were selected based on intelligence, including anonymous reports, requests for assistance and stakeholder referrals.
- found a 78% non-compliance rate across all franchise businesses
- recovered $731,648 for 780 employees
- resulted in the issuing of 13 infringement notices, 8 compliance notices and 6 litigations.
Of the litigations arising from the activity, we secured $125,700 in one case against The Sushi 79 and $307,802 in another against 3 PappaRich franchisees and their accessories. See Enforcement outcomes for more information.
Outside of this activity, we also secured $57,000 in penalties against service station chain Westside Petroleum, and 3 of its management staff, for underpaying 22 employees across 12 petrol stations over $60,000.
We have recently commenced a second phase of compliance activities into emerging franchises, to determine whether the issues we identified are confined to overseas-based brands, are more closely related to the FRAC industry, the number of years a franchise has been operating or a combination of these factors.
Sham contracting and misclassification
Sham contracting occurs when a person working as an employee is told they’re an independent contractor when they’re not. These types of arrangements can be set up by employers who are seeking to avoid responsibility for paying legal entitlements to employees, such as paid leave and superannuation. Underpayments can also occur due to the misclassification of workers as contractors.
Addressing the drivers of sham contracting and determining if an employment relationship exists is complex. There is no single determining factor, but rather a number of factors that can establish the difference between an employee and an independent contractor. The FWO employs various methods to detect suspected misclassification and sham contracting, including anonymous reports, intelligence gathering and data collection and analysis. We assess individual relationships on a case-by-case basis.
In the 2019–20 budget, we received $9.8 million over 4 years to establish a Sham Contracting Unit (SCU). In the past year, the SCU has been activated, and the agency has completed 309 disputes relating to sham contracting and misclassification, recovering $363,976 for 278 employees – a 200% increase in disputes completed and 83% increase in monies recovered compared to the previous financial year.
The SCU has also commenced compliance activities into potential sham contracting arrangements. The most notable of these activities is our ongoing investigation into cleaning arrangements at stadiums in Melbourne (AAMI Park), Canberra (GIO Stadium), Sydney (ANZ Stadium) and Perth (Optus Stadium). As part of this activity, FWO inspectors reviewed employment records and met with cleaners and supervisors to discuss the work cleaners are required to do. A report on these activities will be published on our website in due course.
Our website provides tailored resources to educate businesses and workers on their rights and obligations and outlines key differences between employees and independent contractors, including a dedicated web page for independent contractors and a downloadable fact sheet. In the 2019-20 financial year, these resources were collectively viewed over 200,000 times.
We also undertook activities to gather further intelligence about sham contracting arrangements in the Health Care and Social Assistance sector. In November 2019, we ran a communications campaign to gain insights into sham contracting arrangements. The campaign promoted a survey that was designed to identify the main issues and areas of non-compliance in this sector. Promotion included social media (Facebook) and digital display advertising. We received almost 2000 responses to the survey, which we will use to inform future resources and activities in this sector.
Vulnerable and migrant workers
Vulnerable workers has been a priority cohort for many years and remained a key priority in 2019–20.
Employees can be vulnerable to exploitation due to a range of characteristics, including age, ethnic or cultural background, and language barriers.
Migrant workers in particular continue to be over-represented in the FWO’s work, due to limited knowledge about Australia’s workplace rights and entitlements, and language and cultural barriers. While they make up only 7% of the Australian workforce, in 2019–20 migrant workers accounted for:
- 20% of disputes completed
- 22% of anonymous reports received
- 44% of litigations initiated.
We continued to prioritise addressing the exploitation of vulnerable and migrant workers in 2019–20 through education, engagement, and enforcement activities. Key activities included:
- using enforcement tools to deal with the most serious cases of non-compliance against this cohort. In 2019–20, we:
- secured $2,987,149 in court ordered penalties for migrant workers and recovered $1,740,856 in unpaid wages
- commenced 3 litigations under the ‘serious contraventions’ provisions introduced through the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 PVW Act), all of which involved alleged underpayment of migrant workers
- secured our first penalty judgment for a matter filed under the new PVW Act provisions in a case involving underpayment of migrant workers. See Litigation for more information
- continuing to make workplace rights information more accessible for migrant workers, by adding more professionally translated material to our website and making our auto-translation tool available for important new resources, such as our Horticulture Showcase and coronavirus website. For more information on these resources, see Online services
- continuing to work with the Department of Home Affairs on our visa assurance protocol as a means of encouraging migrant workers to report workplace exploitation without fear of visa cancellation. Under the protocol, a worker's temporary visa with work rights won't be cancelled if they have not complied with their visa conditions due to workplace exploitation, have sought our assistance with workplace issues and meet other criteria, including committing to following visa conditions in the future
- supporting the Pacific Labour Scheme and Seasonal Worker Programme by conducting compliance activities and providing educative resources to seasonable workers and workplace relations advice to participants
- running communications campaigns to promote our in-language resources, including digital campaigns across social media to promote our professionally translated Fair Work Information Statement and our in-language anonymous report tool
- delivering numerous training workshops to intermediaries such as community organisations, education providers and student ambassadors, who then share the information they’ve learnt through their networks and communities
- contributing as a member of the Migrant Workers’ Interagency Group and assisting with progressing the recommendations of the Migrant Workers’ Taskforce
- participating in forums and networks, and working collaboratively with government bodies to combat human trafficking and slavery-like practices. This includes reporting suspected human trafficking and slavery cases to the Australian Federal Police, contributing to the development of the Commonwealth’s first annual Modern Slavery Statement and sharing information about our work through the Interdepartmental Committee on Human Trafficking and Slavery and the National Human Trafficking Roundtable.
Large corporate underpayments
Since July 2019, the FWO has seen a significant increase in the number of large corporate entities who are self-reporting non-compliance with their workplace obligations to us. Many of these involve significant and complex underpayments (usually involving contraventions of enterprise or collective agreements) totalling tens of millions of dollars and affecting thousands of past and present employees over several years.
The agency received more than 50 self-reports of non-compliance from businesses in 2019–20, including from large corporations. We completed investigations into 22 of these matters. Self-reported non-compliance matters resulted in back-payments of over $90 million for more than 12,000 employees.
Across these matters, non-compliance was largely driven by ineffective governance and, in some cases, unacceptable complacency about workplace obligations. Some examples include:
- ineffective and outdated manual processes for recording hours of work
- failing to apply an enterprise agreement to all employees it covers
- failing to implement all the terms of a new enterprise agreement
- applying annualised salaries that don’t cover the award rates for all hours worked
- failing to undertake annual reconciliations where required.
We investigate each self-report of non-compliance made by a corporate entity. In order to manage this unprecedented body of new work within our existing resources, we established an internal Corporate Sector Taskforce. Our Taskforce works in conjunction with our compliance and enforcement teams to respond to the large body of work presented by the extensive and complex nature of self-reported non-compliance by large employers, and look to test new approaches and processes in these cases.
On 27 February 2020, the Fair Work Ombudsman, Sandra Parker PSM, also wrote to the CEOs and Chairs of the top listed companies across Australia, calling for immediate action to assure themselves, their shareholders, their employees and the community that their companies are meeting lawful obligations.
We encourage all businesses to cooperate with us to rectify their non-compliance, and so far, all of those who have self-reported to us have engaged in remediation activities. In 2019–20, we entered into nine Enforceable Undertakings (EUs) with businesses who self-reported non-compliance to ensure the issues that led to their non-compliance are addressed.
Where businesses fully co-operate, EUs are an effective and court-enforceable enforcement tool to return wages to employees in a timely and cost-effective way.
EUs can also deliver outcomes that are not available via other enforcement tools, such as:
- recovering wages outside of the 6-year statutory limitation period for court orders for unpaid wages
- independent payroll audits for the life of the EU, paid for by the business
- establishing robust mechanisms to achieve ongoing compliance, such as new payroll systems, improved governance, management and staff training and hotlines to report concerns
- public apologies
- contrition payments.
Three EUs relating to a self-reported non-compliance have included terms requiring the employer to meet the cost of having their underpayments investigated and verified by experts, under the supervision of the FWO, so that the primary burden of calculating underpayments is placed on the employer rather than the taxpayer.
The FWO can and does take litigation action under the Fair Work Act where employers fail to comply with requirements under an EU. For a case study of when we have done so in 2019–20, see Litigation.
EUs have represented the most appropriate enforcement outcome for a number of the self-reported non-compliance matters completed in the 2019–20 financial year. The FWO will use all enforcement tools available to it in response to these matters, including litigation where it is in the public interest to do so.