Large corporate underpayments a priority for the Fair Work Ombudsman

July 14, 2020
FCB Workplace Law

Yesterday, the Fair Work Ombudsman (FWO) Sandra Parker announced the regulator’s strategic priorities for 2020-2021 which maintains a keen focus on large corporate underpayments, sham contracting, and compliance within vulnerable sectors including franchises, fast food, restaurants and hospitality.

Earlier in the year, the Ombudsman wrote to CEOs and Boards of Australia’s top listed companies, reminding them of their lawful obligations under the Fair Work Act 2009.

It’s been revealed that more than 60 businesses have come forward and notified the FWO of workplace law breaches equating to more than half a billion dollars owed to employees.

“Large organisations need to place a much higher priority on rigorously reviewing workplace relations systems to ensure that paying workers what they are entitled to becomes the norm,” Ms Parker said.

Ms Parker says since the pandemic hit, there has been a considerable number of Australian employers and employees requesting assistance – allegations of serious non-compliance with workplace laws, including the JobKeeper scheme will be a priority.

What is the FWO’s approach?

The FWO will exercise its statutory functions and has updated the Compliance and Enforcement Policy. The policy summarises its approach to regulating Australian workplaces which takes into account the changed economic conditions bought on by COVID-19 as well as the temporary amendments to the Fair Work Act 2009.

Wes O’Donnell, National Workplace Relations Manager at FCB Group and HR Assured says: “While the FWO is taking a firm view with large corporates, and is continuing a strong focus upon industries which engage vulnerable workers such as fast food, restaurants, cafes and hospitality, there appears to be a concession made by the FWO that their compliance initiatives will take into account the impact the pandemic has had on the business and industry.

“This is particularly pertinent given that the target industries of the FWO are those which have been particularly hardest hit by the pandemic, he said.”

What should your business do?

The FWO’s Compliance and Enforcement Policy outlines that the FWO will be taking a proportionate approach to the expectation of reporting non-compliance. That is, in cases of “isolated payroll errors resulting in underpayments over a short period of time (up to 12 months)” there is no expectation to self-report to the FWO where the business has:

  1. informed employees of the underpayment;
  2. back paid employees as soon as practicable; and
  3. implemented changes to ensure that further non-compliance issues do not arise.

While it is interesting to note that the FWO views “isolated issues” over a “short period” to be up to 12 months, which may be viewed as excessive by many, this should not be seen as a free pass being issued to businesses by the FWO.

The recent announcement reaffirms the FWO’s commitment to compliance and its expectations that companies proactively assess their compliance profile and take positive steps to rectify any issues identified.

With many businesses rightfully concerned with brand damage arising from an expectation to self-report to the FWO, it would appear as though businesses are now presented with a greater number of options to navigate through any identified non-compliance matters, in a manner which accords with the expectations of the FWO, meets the company’s lawful obligations and significantly reduces the likelihood of adverse publicity and brand damage.

Wes O’Donnell says a detailed understanding of the regulatory framework in audits and non-compliances responses undertaken is critical to the success of the process.

Be proactive

The FWO continually targets businesses – last year the regulator conducted a basic audit and found that 70 per cent of non-compliant businesses underpaid their workers.

Recent large scale underpayments have also served to shift the compliance obligation, in the view of the FWO, from an executive matter to that of a governance issue which should be directed by the Board.

The expectation of the FWO is clear, there is an expectation that businesses undertake a timely proactive review of its employment practice to identify any areas of non-compliance and “stress test” regular reviews and procedures to ensure compliance on an ongoing basis.

External support

If finding time to manage your compliance is difficult, or you’re unsure whether you’ve got the basics right and would pass an audit, there are cost-effective solutions available to you.

Developed in-house, and winner of the LexisNexis legal Innovation Index award, FCB PayCheck is our auditing solution that delivers fast, detailed and incredibly accurate underpayment audits, to even the largest businesses, at a fraction of the cost of traditional forensic accounting.

Get ahead of any underpayment problem – potential or actual – and protect your business and brand. Contact us in confidence today to find out how FCB or our Paycheck solution could help you.