Speaking at the 2019 National Policy Influence Reform Conference in Canberra, Ombudsman Sandra Parker (pictured) outlined how her office plans to use the new powers and resources given to it under the federal budget, now that the outcome of the election is known.
“While it can be difficult as a regulator to find the right balance between using enforcement tools and getting a timely outcome, I am conscious that Parliament has given us increased powers and more resources, so it’s on us to send a strong message of deterrence to would-be lawbreakers,” she said.
“The Prime Minister and the new Minister for Industrial Relations have also said that a priority for the government is on law enforcement and adherence with Australia’s industrial relations laws.”
Ms Parker said that the industries of priority for the FWO are fast food operators, restaurants and cafes; horticulture operators and those on the “harvest trail”; and franchisors.
In terms of issues, the FWO is taking a particular interest in investigation sham contracting as well as supply chain risks. Vulnerable workers, including migrants and young people, will continue to be the focus of its work.
“So, if you are in one of these industries, operate a franchise system or employ large numbers of migrant workers, you should expect to hear from us,” she said.
Ms Parker added that the regulator will also be paying close attention to matters which:
- Are of significant public interest
- Demonstrate a blatant disregard for the law
- Are of significant scale or impact on workers or the community
- Can test the law or use new laws
“We will use our new powers and publicly name employers who break the law to get the message out that it is not acceptable to underpay workers or deprive them of their entitlements. Employers who do this will get caught,” she said.
“If an employee comes to us and says they haven’t been paid and their employer is giving them the runaround, we have the power to compel records.
“If these records are deficient in some way, we can issue a penalty infringement notice, and if an Inspector forms a reasonable belief that there’s been an underpayment, the Inspector can issue a compliance notice.”
Greater reliance on enforcement
In addition to outlining priority areas, the Ombudsman also flagged a greater reliance on its enforcement tools in the future, following recommendations by the banking royal commission and the Migrant Worker Taskforce for regulators to use a firmer hand.
“Previous reviews have generally been positive about the Fair Work Ombudsman, like the one conducted by the Productivity Commission in 2015. But Australian workplaces are changing, as are the community’s expectations of its regulators charged with holding an industry or function of the economy to account,” Ms Parker said.
“Consider for instance the findings of the banking royal commission and Professor Fels’s Migrant Worker Taskforce report. Professor Fels, in particular, has formed the view that the Fair Work Ombudsman increasingly risks being viewed as a mediator rather than a regulator and that we have been too cautious in our use of enforcement tools.
“I’m extremely proud of the work that our frontline staff do everyday, resolving disputes through education and conversations, returning millions of dollars to underpaid workers every year in an average of just seven days, while preserving employment relationships along the way. That work will always be important, but I do understand Professor Fels’s argument, especially when I reflect on the agency’s role as it is written into the Fair Work Act.”
She continued: “Taking a firmer stance on non-compliance does not, however, give regulators licence to be draconian or irresponsible. The FWO still operates according to an enforcement pyramid that looks at the seriousness and deliberateness of the behaviour we regulate. It’s a fact that mistakes happen, and this can lead to underpayment.”
As such, Ms Parker said that greater enforcement would include a larger role for compliance notices, which will be simplified and act as a warning for employers to “get their house in order” or face legal action.
Navigating changing workplaces
In her speech, Ms Parker said that it is “not an easy task by any means” of holding wrongdoers to account “when you consider that there are 12 million workers and 2 million businesses that we regulate”.
She also said that changing business conditions are impacting the regulatory environment, including:
- Staff turnover rates are at a 10-year high of around 18 per cent, but that this figure increases sharply for young workers.
- Union membership is now at 9 per cent of the private sector, with low levels of union presence among SMEs.
- Labour hire arrangements are common in Australia.
- We also as a nation have one of the highest rates of franchising in the world.
- Migration is the largest single contributor to employment growth.
These changes, she said, have and are creating a “more complex and changing workplace environment”, which are being used by “unscrupulous employers to evade detection”.