The Fair Work Ombudsman’s October 2018 Report (Report) into National compliance reinforces one or two truisms that are unfortunately part of the baggage that continues to burden our industrial relations system. In addition to shining a light on those areas of our economy where non-compliance remains a huge problem, the Report tells us that almost 40% of previously non-compliant employers continue to offend.
The Fair Work Ombudsman (FWO) via the National Compliance Monitoring program (NCM), re-audits previously non-compliant employers, the aim being to:
- assess the status of previously non-compliant employers;
- put in place tools that enables these same business to stay above the line; and
- where appropriate, escalate enforceable actions on those employers, who despite previous cautions, continue to adopt recalcitrant positions on compliance.
Those industries that historically are weak in terms of their compliance obligations include, restaurant and catering; retail; fast food; building and construction and manufacturing. All of these industries have two things in common, firstly, a high proportion of casual employment and secondly, the thousands of employees who sign on as ‘contractors’ only to fall foul of the sham contracting provisions of the Fairwork Act. This problem is particularly endemic in the construction and food industries where employers continue to insist on engaging people on an ABN, when the correct approach would be either to employ them on a casual or part-time basis.
By re-auditing previous offenders, the Ombudsman takes the view that its inspectors gain insights into the effectiveness of their previous work and conversely previous offenders, more fully understand what is required to be compliant with their obligations.
Those instruments found to be most effective include, infringement notices and formal cautions.
The compliance issues that just keep on keeping on
Of the 279 employers audited, 33 % of respondents were found to have breached their obligations around record keeping and pay slips. Every employer, whether a casual, pieceworker, shift worker, part-time or full-time is entitled to a payslip on a weekly, fortnightly or monthly basis.
A further 14% somewhat perversely were underpaying their employees, with respect to penalty rates for overtime and weekend work, yet were compliant when it came to issuing payslips. A further 33% were simply not paying employees the correct hourly rate of pay.
In total dollar terms, almost $4 million was recovered from 6,300 employers including an inordinate amount of $3,569,200 from the Chemist Warehouse (Group), who were found to have underpaid over 5000 employees for undertaking on-line training after hours.
Whilst this is undoubtedly a very big number, all employees were paid out in full and the Group undertook to enter into a 3 year compliance partnership with FWO in November 2016. The outcome of this partnership has seen the Group:
- improve its administrative procedures;
- create a company administered hotline account for employees to make enquiries about entitlements; and
- undertake a group wide audit by an external provider (FCB – a boutique Sydney employment law firm).
All of which has resulted in marked reduction in complaint levels from staff and in its levels of exposure.
If one takes out the Chemist Warehouse example of the remaining 98 businesses re-audited, a relatively small amount of $244,200 was recovered from 98 employers and 347 workers.
This is mixed result. Whilst 40% continue to re-offend, the trend appears to be going in the right direction. The methods being employed by the FWO appear to be going some way towards reducing the liability of repeat offenders. Clearly the use of formal cautions; infringement notices, compliance notices, enforceable undertakings and various other enhanced methods of compliance, have started to bite and reduce the number of long-term recalcitrant businesses both large and small from operating beyond our workplace laws.
In saying that, unsurprisingly, our small business community whilst being the ‘engine room of the nation’, continue to be the worst offenders, with many blithely paying little or no attention to their obligations.
The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.