Under the Fair Work Ombudsman’s new set of priorities, your business may be at risk of increased scrutiny. Penalties for underpaying workers or failing to keep adequate records are set to increase as the Fair Work Ombudsman plans to take a firmer stance in enforcing the Fair Work Act.
The Fair Work Act is a piece of legislation that was put in place in 2009, reforming the industrial relations system in Australia. Designed to provide a safety net of minimum entitlements for employees, enable flexible working arrangements, and promote fairness in the workplace, the Act is enforced and regulated by the Fair Work Ombudsman (FWO).
Last year, over 27,000 workplace claims were recorded against businesses through the FWO office. Often claims were brought forward by employees, and in many cases, the employer was unaware that they were not complying with the relevant workplace legislation. This is not surprising given Australia’s workplace relations system is one of the most complex in the world, and many small and medium sized businesses do not have specialist HR knowledge in their team.
Enforcing the Act
It was recently announced that, as part of the federal budget, the office of the Fair Work Ombudsman is set to receive an additional $9.2 million of funding over the next four years. This extra funding is provided to help enforce the Fair Work Act, educate workers considered vulnerable to exploitation, and to influence industries with high rates of non-compliance.
Responsible for regulating Australia’s two million businesses and protecting the 12 million workers employed by them, the FWO is focussed on improving workplace compliance in certain industries and cracking down on commonplace, yet illegal practices, such as sham contracting arrangements.
When you look back at the businesses that have been taken to court by the FWO, many were fast food businesses, restaurants or cafes. These are the highest-ranking industries for disputes over the last five years with a quarter of all of the FWO’s litigations and a third of its enforceable undertakings for that time period coming from these businesses.
Already, the FWO conducts surprise audits of businesses, most recently targeting 80 businesses in and around Geelong in Victoria, focussing on businesses that typically employ university students. FWO inspectors will continue to conduct targeted audits across the fast food, restaurant and café sector and intend to hold all employers accountable if they are not meeting their lawful obligations to employees. This extends beyond simply backpayments, and may include more severe penalties.
Focus Areas in the Next Year
The FWO has announced that its new focus for the 2019/20 financial year will include cracking down on non-compliance in these areas:
- Fast food, restaurants and cafes
- Horticulture and the harvest trail
- Supply chain risks
- Sham contracting
If you are a business owner in one of these priority industries, operating a franchise system or employ workers under a contract arrangement (which may be more like an employment arrangement), you are at risk of being audited by the FWO’s inspectors.
Most employers genuinely want to do right by staff, but may not know whether they are actually getting it right. If you believe your business is at risk of an audit, it’s time get proactive about ensuring you meet your pay and record-keeping obligations.
When it comes to managing and complying with your legal obligations as an employer, many small businesses simply dont have the resources or expertise in their business. Outsourced HR is an effective solution for many small and medium sized businesses and can provide the peace of mind that you are complying.
If you want to ensure your business is compliant with the relevant workplace legislation, get in touch with our team today.