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Investigations and activities

2020-21 Compliance and enforcement priorities

In mid-2020, the FWO publicly announced its compliance and enforcement priorities for 2020–21:

  • supporting workplaces through COVID-19
  • large corporate underpayments
  • fast food, restaurants and cafés (FRAC)
  • horticulture
  • franchise arrangements
  • sham contracting.

These priorities guided our investigations and activities for the financial year, allowing us to strategically focus our resources on issues and sectors that our operational data, intelligence and experience indicate have the highest risk of non-compliance.

While supporting workplaces through the COVID-19 pandemic and prioritising the 5 high-risk sectors and issues, our approach has been to:

  • prioritise matters that involve vulnerable workers
  • prioritise small business employers and employees
  • provide and promote the FWO’s advice and resources
  • monitor and enforce compliance broadly, including by:
    • treating each matter on its merits
    • exercising discernment and prudent judgment, taking account of the public interest
    • responding in a fair, reasonable and proportionate manner
    • making decisions based on evidence.

Investigations in response to requests for assistance

In 2020–21, we conducted 4,201 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. This is a 77% increase in investigations conducted compared with the previous financial year. From these investigations, we recovered over $28.7 million in underpayments.

Compliance activities

Our compliance activities target priority industries, geographic regions and businesses with high levels and/or systemic risks of non-compliance.

These compliance activities allow us to:

  • verify our intelligence by targeting priority industries, sectors and businesses with 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 2020–21, as part of our proactive compliance activities, we investigated 874 workplaces and recovered $5,837,773 in unpaid wages.1 The accommodation and food services industry featured the most in these activities (28%), followed by retail (9%).

Audits of 698 workplaces were completed during the year. The overall non-compliance rate found through audits for the year was 81%, with the most common contraventions relating to:

  • hourly rate underpayments (13%)
  • penalty rates for weekend work (9%)
  • annual leave (9%).

Compliance and contravention rates for targeted audits do not necessarily indicate general rates of compliance across all Australian workplaces. FWO compliance activities target industries or geographic areas where our intelligence indicates that compliance risks are present.

FWO Notices

A FWO Notice is a written notice issued under the Fair Work Act during certain investigations that can compel a person to:

  • give information to the FWO
  • produce documents to the FWO
  • appear before the FWO at a specific time and place to answer questions relevant to an investigation.

The Administrative Appeals Tribunal issues a FWO Notice on application by the FWO, where they agree that there are reasonable grounds to believe the person receiving the notice can assist the FWO’s investigation.

Failure to comply with a FWO Notice can result in court-ordered penalties.

In 2020–21, 4 FWO Notice examinations were conducted where avenues to obtain evidence were exhausted, inappropriate, or an investigation was impeded.

Anonymous reporting

Our Anonymous Report tool lets members of the community notify us if they suspect a business or individual is breaching workplace laws.

The intelligence we collect from anonymous reports, combined with other operational data and research, helps to inform and improve our targeting for compliance activities.

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 2020–21, we received 14,109 anonymous reports. Of these reports, 620 were in languages other than English.

In line with previous years, the highest number of reports was from the hospitality industry (including fast food, restaurants and cafés), accounting for 36% of all reports received in 2020–21. The next highest industries were retail (14%) and building and construction (6%).

The top languages reports were made in, other than English, were:

  • Simplified Chinese (41%)
  • Traditional Chinese (17%)
  • Korean (13%)
  • Japanese (10%).

The highest number of in-language anonymous reports was received from the hospitality industry, totalling 46% of all in-language reports.

This was followed by:

  • food manufacturing and processing (14%)
  • retail (10%)
  • agriculture (7%).

Large corporate underpayments

The agency continued to receive self-reports of non-compliance from employers in 2020–21, including from large corporate entities. We completed investigations into 49 self-reported matters. Self-reported non-compliance matters resulted in back-payments of over $100 million in total, covering more than 54,500 employees.

Across these matters, the non-compliance was largely driven by ineffective governance and systems of internal controls to monitor, detect and address non-compliance with workplace obligations. In many cases we observed complacency about workplace obligations. Examples include:

  • ineffective and outdated manual processes for recording hours of work, or not keeping records of time worked at all for employees covered by Fair Work instruments
  • failing to apply an enterprise agreement to all employees it covers
  • failing to implement, or using a different approach to, the terms of an enterprise agreement
  • applying annualised salaries that don’t cover the award rates for the hours being worked by employees in practice, or ‘setting and forgetting’ annualised salary amounts that become insufficient over time to meet minimum entitlements
  • no, or poor, mechanisms for checking payroll compliance or completing annual reconciliation requirements
  • decentralised and ad hoc approaches to managing payroll within organisations
  • failing to invest in payroll and/or workplace relations expertise when setting up payroll systems or implementing pay rules for new or changed entitlements
  • a lack of governance and compliance policies, or lack of assurance mechanisms by Boards and senior leaders, to treat wages compliance as a significant compliance risk.

We investigate each self-report of non-compliance made by a large corporate entity. To respond to this large and complex body of work we redeployed internal resources, including inspectors and lawyers, to a specialised Large Corporates Branch.

Additional Government funding of $22.3 million, announced in December 2020, is assisting the branch to deliver a greater number of targeted compliance and enforcement outcomes. It will also enable us to enhance how technology and external expertise are used to investigate large corporate underpayments.

In response to self-reports (and media reports) of underpayments by Australian universities, we commenced a strategy to address non-compliance in the higher education sector. The strategy involves:

  • engaging with relevant government agencies and peak university bodies to raise concerns about non-compliance in the sector, promote the FWO’s resources and encourage all universities to review their compliance with workplace laws and address all underpayments as soon as possible
  • contacting universities directly seeking assurances that they are compliant
  • investigating instances of non-compliance, with investigations into 10 universities ongoing as of 30 June 2021.

We encourage all businesses to cooperate with us to rectify their non-compliance; so far, all of those who have self-reported to us have engaged in remediation activities.

In 2020–21, we entered into 17 enforceable undertakings (EUs) with businesses who self-reported non-compliance to ensure all backpayments to employees are made as quickly as possible and the issues that led to their non-compliance are addressed.

Terms requiring the employer to meet the cost of having their underpayments investigated and verified by experts, under the supervision of the FWO, are included in 8 of these EUs. This is 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. We may also use litigation (and our other enforcement tools) in response to these matters, where it is in the public interest to do so.

In 2020–21, we commenced legal action against Woolworths Group Limited and Woolworths (South Australia) Proprietary Limited, in relation to major underpayments of salaried managers.2 In 2019, the supermarket operator disclosed that it had underpaid thousands of salaried employees. Despite back-payments being made, we allege that a total of $713,395 of underpayments remains outstanding.

We are seeking court orders for Woolworths Group Limited to rectify the total outstanding underpayments in relation to the 70 managers whose records were assessed, and for both companies to then apply those calculation methods to rectify any underpayments owed to all other affected salaried managers, plus interest and superannuation.

Fast food, restaurants and cafés

The fast food, restaurants and cafés (FRAC) sector is one of the FWO’s key compliance and enforcement priorities, due to its disproportionately high levels of non-compliance and its vulnerable workforce.

The hospitality industry remains the industry with the highest number of disputes we assist with each year. It also made up one-third (36%) of all anonymous reports we received in 2020–21 (twice the number for the second-highest industry, retail). Within this industry, the highest rates of non-compliance are found in the FRAC sector. In 2020–21, this sector alone accounted for 36% of our total litigations initiated.

Our FRAC Strategy seeks to address the systemic non-compliance in this sector. It employs a multi-pronged approach, including engagement, education and enforcement activities, to improve compliance levels in this sector.

As part of the strategy, we ran a communications campaign in May 2021 to raise awareness of pay and entitlements by promoting the FWO’s Fast Food Industry Award interactive tool and Restaurant Industry Award interactive tool. The campaign was seen 7.9 million times across Facebook, digital display and Google search. For more information on these resources, see Online services.

We also continued to conduct compliance activities that targeted popular food precincts and FRAC franchises around Australia. This included surprise audits of:

  • 50 businesses in and around the Gold Coast’s Southport and Mermaid Beach food districts
  • 56 restaurants, cafés and fast food outlets in Adelaide’s Chinatown precinct.

We also finalised a range of compliance activities and enforcement outcomes against non-compliant FRAC businesses in 2020–21. Some key examples include:

  • finalising outcomes for 3 of our food precincts activities, which involved auditing a combined total of 138 businesses around the country. The activities:
    • found non-compliance rates of 84% (Melbourne), 88% (Brisbane) and almost 78% (Hobart) among FRAC businesses
    • recovered $1,085,888 in wages for 931 workers
    • resulted in the issuing of 1 contravention letter, 73 infringement notices, 19 formal cautions, 76 compliance notices and the initiation of 2 litigations, with litigation also being considered in relation to another business.
  • finalising outcomes in our Top Juice compliance activity, with 9 stores in Sydney, 3 in Melbourne and 1 each in Brisbane, Canberra, NSW’s Central Coast and Wollongong audited. The activity:
    • found a non-compliance rate of 44% for the 16 outlets audited
    • recovered $32,435 in unpaid wages for 18 workers
    • resulted in the issuing of 1 formal caution, 2 infringement notices and 5 compliance notices.

In 2020–21, we initiated 27 FRAC sector litigations and secured a total of $1,841,347 in court-ordered penalties against noncompliant companies, business owners and their accessories in this sector.

In one matter, we secured a total of $309,750 in penalties in response to a migrant employee being underpaid almost $70,000 and records being falsified at a Melbourne Chinese restaurant.3

Horticulture

The horticulture industry has a number of characteristics that, based on our operational data and intelligence, make the sector a high risk for 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 Horticulture Strategy, informed by our Harvest Trail Inquiry Report (November 2018), aims to build a culture of compliance in the horticulture and viticulture sectors. This is being achieved through engagement, education and enforcement activities.

A key part of the strategy is the provision of industry-specific information, tailored resources and self-help tools for employers and employees. In 2020–21, we added a visual piecework agreement template for horticulture employers to our horticulture digital showcase. For more information on the showcase, see Online services.

In April 2021, we delivered a communications campaign to promote the visual piecework agreement. The campaign was seen 4.5 million times on Facebook, LinkedIn, digital display and Google search.

We also ran a communications campaign in November 2020, to promote our ‘explainer’ video on supply chains in the horticulture industry. The video was created in response to Harvest Trail Inquiry findings. Campaign messages were seen over 2.6 million times on Facebook and LinkedIn.

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, comprising 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, including by providing educative resources and advice to seasonal workers and participants
  • 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
  • worked closely with the ATO’s Phoenixing Taskforce in assessing whether any directors of the 162 no longer operating entities that were found to be non-compliant during the nation-wide Harvest Trail Inquiry present a compliance risk.

We also continued to monitor workplace compliance in the horticulture industry, with Fair Work Inspectors assessing over 260 businesses connected with the harvesting of various crops during 2019–20 and 2020–21.

Some key outcomes of these investigations include:

  • 83 businesses found to be non-compliant during our Harvest Trail Inquiry still operating in the sector and employing staff. The activity:
    • found 38 of these 83 businesses were non-compliant
    • recovered $64,134 in unpaid wages for 279 workers
    • resulted in the issuing of 7 infringement notices.
  • a review of 14 labour hire providers and 2 growers operating in Queensland’s Wide Bay and Moreton Bay regions:
    • recovered $5,591 in unpaid wages for 39 workers
    • resulted in the issuing of 1 letter of caution, 2 infringement notices and 3 compliance notices
    • in Wide Bay, inspectors also checked on Seasonal Worker Programme employers, finding no breaches of workplace laws by these employers
    • in Moreton Bay, we referred 5 labour hire providers to the Queensland Government’s Labour Hire Licence Compliance Unit, with all 5 later having their licences revoked.

While some investigations are continuing, inspectors have recorded an increase in the numbers of piece rate agreements being signed by workers, as well as improvements in record-keeping, especially among larger firms.

Franchisors

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 several 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 2020–21, 9% of all anonymous reports the FWO received related to franchises. Of these, the vast majority came from the hospitality (49%) and retail (35%) industries.

We have a range of resources to help franchisors and franchisees understand their workplace obligations and comply with workplace laws, including guides, dedicated web pages and videos.

In the last financial year, we ran a communications campaign aimed at educating migrant and culturally and linguistically diverse employers and franchisors about their obligations. The campaign was delivered in Mandarin, Arabic, Cantonese, Vietnamese, Korean and English. It was seen over 3.7 million times across Facebook, digital display and Google search.

In 2020–21, we released the findings of our investigation into salad, sandwich and coffee franchise Soul Origin. We recovered $78,944 in unpaid wages for 230 workers after finding 83% of the stores and a manufacturing site were in breach of workplace laws. A further $112,420 in court-ordered penalties was secured against the operators of 4 ‘The Ironing Shop’ franchise outlets in Brisbane after they paid a Chinese national wages as low as $8 an hour and used false or misleading records.

A further $112,420 in court-ordered penalties was secured against the operators of 4 ‘The Ironing Shop’ franchise outlets in Brisbane after they paid a Chinese national wages as low as $8 an hour and used false or misleading records.

Unlawfully low flat rates of pay also resulted in $57,800 in penalties against a former Chatime bubble tea franchisee in Sydney that underpaid 17 workers.

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 uses 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 2020–21, our Sham Contracting Unit (SCU) completed 342 disputes relating to sham contracting and misclassification. The unit recovered $129,917 for 54 employees. The outcomes of an investigation into cleaning operations at some of Australia’s leading sporting venues were released in October 2020. The SCU recovered $25,292 in unpaid wages for 270 employees following an investigation into cleaning arrangements at stadiums in Melbourne (AAMI Park), Canberra (GIO Stadium), Sydney (ANZ Stadium) and Perth (Optus Stadium).

SCU found 7 of the 9 cleaning companies investigated were noncompliant with workplace laws. Breaches included failures to correctly pay the minimum hourly rate, casual loading, and penalty rates for weekend, public holiday and overtime hours, and failures to provide pay slips.

While the stadium operators were not found to be involved in contravention of workplace laws, inspectors found layers of sub-contracting operating without appropriate checks and balances to ensure workplace relations compliance. Inspectors also found poor record-keeping practices at the bottom of sub-contracting supply chains. No sham contracting or misclassification of employment was found.

We also recovered $389,982 in unpaid wages for 163 security guards following an investigation into 19 businesses in Queensland. The investigation was commenced after intelligence – including anonymous tip-offs and job advertisements – raised concerns that some guards may have been incorrectly engaged as independent contractors rather than employees.

We found a non-compliance rate of 53%. The most common breaches of workplace laws related to underpayments of weekend penalty rates and the minimum rate for ordinary hours. No evidence of sham contracting was identified.

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. For more information about these resources see Online services.

In April 2021, we ran a communications campaign to educate workers in industries disproportionately affected by sham contracting and misclassification, including the cleaning, security and gig/sharing economy sectors. The campaign promoted FWO’s digital sham contracting information and resources. The campaign was seen over 5.4 million times across Facebook, LinkedIn and digital display.

Vulnerable and migrant workers

Vulnerable workers remain a key priority. Employees can be vulnerable to exploitation due to a range of characteristics, including age, disability, ethnic or cultural background and language barriers. Migrant workers continue to be over-represented in the FWO’s work, due to their limited knowledge about Australia’s workplace rights and entitlements, and language and cultural barriers. While they make up only 4% of the Australian workforce,4 in 2020–21 migrant workers accounted for:

  • 19% of disputes completed
  • 20% of anonymous reports received
  • 32% of litigations initiated.

We continued to prioritise addressing the exploitation of vulnerable and migrant workers through education, engagement and enforcement activities. Key activities in 2020–21 included:

  • using enforcement tools to deal with the most serious cases of non-compliance against this cohort. In 2020–21, we:
    • secured $2,082,051 in court-ordered penalties for migrant workers and recovered $824,443 in unpaid wages. More than $1.2 million of the penalties involved contraventions under the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017
    • achieved a court-ordered penalty under the ‘serious contraventions’ provisions of the Protecting Vulnerable Workers laws, including against a former café franchisee and general manager, and against a toy company and its sole director. See Litigation for more information
    • issued 147 compliance notices, 68 infringement notices and 5 formal cautions for breaches involving migrant workers. In a key example, we issued 20 compliance notices, 34 infringement notices and 2 formal cautions during our proactive national investigation of 51 fast food outlets, restaurants and cafés employing Korean workers – $161,551 in unpaid wages was recovered for 284 workers.5
  • continuing to improve the accessibility of our workplace rights information, by adding more professionally translated material to our website. For more information on these resources, see Online services
  • continuing to work with the Department of Home Affairs on the visa assurance protocol as a means of encouraging migrant workers to report workplace exploitation. Under the protocol, a worker’s temporary visa won’t be cancelled if they have not complied with the work-related visa conditions, 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 seasonal workers and workplace relations advice to participants
  • running communications campaigns to promote our resources, including English and in-language social media campaigns to promote our pay and conditions tool, new Casual Employment Information Statement and resources for Aboriginal and Torres Strait Islander employers and employees
  • 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 other government bodies to combat human trafficking and slavery-like practices.6 This includes reporting suspected human trafficking and slavery cases to the Australian Federal Police and sharing information about our work through the Interdepartmental Committee on Human Trafficking and Slavery and the National Roundtable on Human Trafficking and Slavery.

Footnotes

  1. The total number of compliance activities includes all FWO-initiated activities, including local initiatives, inquiries and other FWO-initiated matters.
  2. FWO media release, FWO takes action against Woolworths, 18 June 2021, https://www.fairwork.gov.au/about-us/news-and-media-releases/2021-media-releases/june2021/20210618-woolworths-litigation-media-release
  3. FWO media release, Chinese restaurant in Melbourne penalised, 29 June 2021, https://www. fairwork.gov.au/about-us/news-and-media-releases/2021-media-releases/june-2021/20210629- china-bar-penalty-media-release
  4. Department of Home Affairs: The numbers of visa holders in Australia are derived from: DHA, Temporary Visa Holders in Australia, published on Data.gov.au, as at 31 May 2021 The approximate proportion of total workforce who are visa workers is indicative only. It has been derived from dividing the number of visa holders with work rights by the labour force at the same point in time. The Labour force have been sourced from the ABS Labour Force Survey (employed persons (Seasonally adjusted) May 2021: 13,125,100, June 2020: 12,353,300, June 2019:12,854,700, Jun 2018: 12,575,300) Australian Bureau of Statistics, Labour Force, Australia, Nov 2020, cat. no. 6202.0., <http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0>
  5. FWO media release, Over $160,000 recovered in Korean worker audits, 25 September 2020, https://www.fairwork.gov.au/about-us/news-and-media-releases/2020-media-releases/september2020/20200925-korean-frac-report-media-release 11 While human trafficking offences don’t fall within our remit, we understand that through our work we may interact with victims and perpetrators of human trafficking and slavery.
  6. While human trafficking offences don’t fall within our remit, we understand that through our work we may interact with victims and perpetrators of human trafficking and slavery.