FWO on underpayment: Self-disclosure no longer enough
Big business wage thieves looking for a soft response from the workplace watchdog are going to be disappointed, with fair work ombudsman Sandra Parker declaring an intention to be hands-on with big firms who confess underpayments.
Speaking at a Council of Small Businesses Australia summit in Melbourne on Thursday, Parker said some large companies have been “sloppy” in their payroll practices, failing to keep their houses in order.
“We’re getting a lot more companies coming to us self-disclosing large underpayments, many of them going back many years,” Parker said.
“They had been previously saying to us that they’re trying to fix it and we should, therefore, leave them alone to get on with it.”
“That’s not what we’re going to do.”
Big businesses confessing underpayments to the Fair Work Ombudsman (FWO) will be required to, at a minimum, enter into court-enforceable undertakings.
This will involve multi-year external audit plans, training programs, contrition payments and a condition to publicly apologise to the community.
“If they aren’t willing to cooperate with us on that basis, then we will obviously carefully consider litigation,” Parker said.
The list of big businesses caught in alleged wage theft scandals in recent years is lengthy, including franchise networks such as 7-Eleven, Domino’s, Caltex and Retail Food Group.
More recently, jewellery retailer Michael Hill and men’s clothing retailer M.J. Bale admitted to underpaying workers, while the case of celebrity chef George Calombaris’ company MADE Establishment stealing wages has been well publicised.
Calombaris agreed to pay a $200,000 contrition payment under his enforceable undertaking with the FWO for the more than $7.8 million his company underpaid workers in wages and superannuation.
The extent of the payment, notwithstanding MADE’s backpay bill, angered some, including the lawyer who represented workers at the company, who said the payment was not enough.
“Huge shift” in public sentiment
Parker said there’s been a “huge shift” in public attitudes towards wage theft recently, with the federal government now preparing to introduce tough new laws to criminalise underpayment.
“[It has] made everyone stop and think about what that means. We’ve never had a criminal system in workplace relations,” she said.
Parker, whose office was spun out of Michaelia Cash’s Department of Jobs and Small Business and into Attorney-General and Industrial Relations Minister Christian Porter’s portfolio earlier this year, said she’s been in discussion with the government over its proposed crackdown.
“We’ve said to the [Industrial Relations] Minister and the department that the majority of businesses do the right thing,” Parker said.
Parkers comments come as the federal government prepares to move ahead with a broad-based review of Australia’s workplace laws, including examining its in-principled support for migrant worker taskforce recommendations.
That taskforce, overseen by former ACCC boss Allan Fels, found the exploitation of migrant workers is “widespread and entrenched” in Australia, as calls grow in the community for decisive action.
“The community is saying enough is enough,” Parker said on Thursday.
The government is being lobbied to consider simplifying the workplace compliance framework for corporations, including by ditching the Fair Work Commission’s Better Off Overall Test (BOOT), which regulates the approval of enterprise bargaining agreements.
Treasurer Josh Frydenberg said earlier this week the government will prioritise evidence-based reforms to Australia’s workplace laws.
“We are interested in further workplace relations reform that is evidence-based, pragmatic, protects workers entitlements and produces clear gains to the economy and working Australians,” he said.
Small business a focus too
The FWO will also be handing out more compliance notices to businesses underpaying workers, amid efforts to streamline its enforcement efforts.
Parker said a 12-month review of her office’s regulatory model has resulted in a refined focus that should be simpler for businesses.
It comes as the ombudsman juggles its role as a source of education and advice about workplace laws with increasingly strong community expectations about addressing worker exploitation.
“We’ve gone back to the act, and we’ve gone back to looking at exactly what it is the parliament and the community requires of the Fair Work Ombudsman,” Parker said.
“We’re going to be using statutory compliance notices a lot more than we were before,” she said.
Parker said compliance notices aren’t punitive and don’t constitute an admission of guilt, with the focus instead on rectifying any underpayments and educating business owners.
“If people come to us, if they’re willing to work with us, they’re willing to use our tools, we’re not going to prosecute them or take them to court for mistakes,” Parker said.
The FWO issued 220 compliance notices in the 2017-18 year, recovering more than $950,000 in unpaid wages. Three litigations were commenced against employers who did not comply with notices.
Those numbers are expected to increase over the coming year as the FWO continues its compliance efforts, particularly in the fast-food, retail and cafe sectors.
“If a business doesn’t comply we will give them a warning and an opportunity to give a reasonable excuse,” Parker said.
“We will also take them to court if they don’t comply, and we will seek a penalty, both for the failure to comply with the notice and the original contravention.”
A balancing act
Tasked with prosecuting cases of deliberate wage underpayment while helping businesses trying to do the right thing, Parker faces an increasingly precarious balancing act in the coming years as the government ratchets up penalties for wage theft and small business advocates question the complexity of workplace laws.
Asked Thursday about the perception of the FWO among small businesses, Parker said her office was focused on creating quicker solutions.
“We want to implement a quicker [sic] solution when we come across underpayment then we have in the past,” Parker said, saying compliance notices would enable the ombudsman to deliver better outcomes for firms.
“We will issue [compliance notices] more quickly, and there will be more of them.”
The ombudsman has a series of online resources to help businesses remain compliant with their legal obligations, including a comprehensive (and free) pay calculator tool.
This article was first published by SmartCompany, and has been republished with permission.
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