What is the role of the Fair Work Ombudsman?
The Fair Work Ombudsman ensures that workers receive their correct wages, holidays and entitlements, as per the Fair Work Commission’s decisions around minimum wages, awards and enterprise agreements.
The Fair Work Ombudsman provides information and advice about the minimum pay and entitlements under the modern awards, with resources provided for both employers and employees. It’s inspectors also can investigate possible breaches of the Fair Work Act.
Often these investigations are conducted after claims are made by employees or the general public, however the FWO has been conducting an increasing number of surprise audits this year with some huge penalties handed down to employers not meeting minimum requirements under the Act.
Who is at risk of surprise audits?
Surprise audits have often been targeting certain industries, such as hospitality and retail, or focussed on areas that may have a high proportion of employees considered to be at risk of underpayment, such as students or migrant workers. While hospitality is clearly under scrutiny, any business may be faced with a surprise audit.
The results of recent surprise audits indicate that underpaying employees is the key focus.
Some examples of recent penalties handed down to non-compliant employers include:
- A failure to provide paid meal breaks has resulted in national parcel delivery company underpaying staff $382,065 over a period of eight years.
- Penalties of $151,200 against a Victorian plumber and his company for underpaying a young worker
- $307,802 in penalties in response to 154 workers across three restaurants in Sydney being underpaid $74,000
- a western Sydney café must back-pay a casual waitress $36,745 and overhaul its workplace practices, and avoids further penalty after signing a Court-Enforceable Undertaking with the Fair Work Ombudsman.
Claiming ignorance of workplace laws is not considered a valid excuse for underpaying workers and whether it is a surprise audit or a disgruntled employee that makes a claim against your business, any investigation that uncovers underpayments could lead to public notices and negative PR, huge impacts to the team culture, not to mention ongoing scrutiny and of course costly penalties.
Are you paying your employees correctly?
Most employers genuinely want to do the right thing by their employees and we see many employers inadvertently underpaying their employees due to:
- paying well above award initially but not increasing rates over time, then falling below the new minimum pay rates
- using the incorrect award to calculate pay rates
- misinterpretation of the specific award provisions,
- not paying overtime for employees working a 40 hour week,
- misunderstanding leave loading, or
- confusion around shift work penalty rates.
Avoid the risk
Businesses can avoid the risks associated with a surprise Fair Work investigation by being proactive and undertaking an independent audit of their employee’s pay rates and entitlements. We conduct pay audits for many businesses, reviewing roles to ensure that they are allocated to the correct award, and providing advice around minimum pay and entitlements specific to each role.
Where our audit uncovers any concerning underpayments we work with the employer to appropriately manage this, and support the employer to remedy the situation.
Ensure you are meeting your obligations as an employer and contact us for a compliance check today.