The Fair Work Ombudsman has revealed that it will be relying more heavily on issuing “non-punitive” compliance notices to build education, while also revealing more aggressive action against employee underpayments by large employers.
Speaking at the National Small Business Summit in Melbourne, ombudsman Sandra Parker outlined the regulator’s core focus areas for the current financial year, one of which being about changing the tone of its activities to be more about education.
“We’ve spent the last year reviewing our regulatory model,” Ms Parker said, which she noted has involved engaging with stakeholders, employers and the broader community.
She said this also involved looking back over the Fair Work Act and what the Parliament and community require of the FWO.
Ms Parker also cited the recommendations of the Migrant Workers Taskforce — which she said have received in-principle support from the government — including the introduction of criminal sanctions for “egregious forms of deliberate exploitation of workers” and a look at whether compliance notices are fit for purpose.
Greater use of compliance notices
According to Ms Parker, the FWO is focused not just on compliance but also driving cultural change within Australian workplaces, and creating transparency around what is required of employers — and particularly small businesses.
To that end, Ms Parker said that compliance notices will be relied on increasingly heavily.
“We will be using statutory compliance notices a lot more than we have before,” she said.
“This is not a penalty.”
She said that compliance notices are “non-punitive, they are not an admission of guilt, they provide an opportunity for a business to be educated, to rectify the underpayment and then no further action will be taken by us”.
Industries/issues under particular scrutiny
The Fair Work Ombudsman has singled out several sectors that will be attracting particular scrutiny and enforcement action.
Ms Parker said that of particular interest to the FWO are the horticulture/harvest trail and fast food/cafe/restaurant sectors, as well as franchisors.
More broadly, she said that supply chain risks and sham contracting are also a core part of its investigative and enforcement action.
“The aim of announcing our priorities is for increased transparency, so that the community does know where we are directing our resources, and it does mean that small business will know what to expect from us, and that sets some expectations obviously of what we expect,” she said.
Ms Parker also said that the FWO is looking to test the law or use new laws where applicable as part of its bid to drive a culture of compliance.
Larger businesses also in FWO’s sights
It is not just SMEs, however, that are being targeted by the FWO’s efforts to build compliance.
Ms Parker also noted a recent trend of large businesses self-disclosing compliance failures, which she said are often “large underpayments, going back many years”.
Over the past two years, a number of large organisations have revealed widespread wage underpayments, including the ABC, the Commonwealth Bank and retailer Lush, as well as the high-profile example of George Calombaris’ restaurant group MAdE Entertainment.
Contrary to the requests of such businesses to be left to fix these issues and repay affected workers, she said the FWO will be working with them more proactively.
This will involve a number of factors “at a minimum”, including requiring them to sign a court-enforceable undertaking to amend their payroll processes; to repay all monies owed with interest, including superannuation; make a contrition payment; and make a public apology.
“We think it’s important to get the message out that it’s not acceptable,” she said of worker exploitation and underpayments.
“If they’re willing to work with us, if they’re willing to use our tools, we’re not going to prosecute them for mistakes.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.