Fair Work Ombudsman to get tough over worker rip-offs

Employers ripping off workers face a tougher approach by the Fair Work Ombudsman.

Fair Work Ombudsman Sandra Parker in her Melbourne office. Picture: Aaron Francis.

Employers ripping off workers face a tougher approach by the Fair Work Ombudsman, including more compliance notices and “contrition” penalties when self-reporting underpayments, following criticism of the workplace regulator’s cautious approach to enforcement.

In the wake of critical findings by the banking royal commission and the Migrant Worker Taskforce, Fair Work Ombudsman Sandra Parker said she understood the argument by taskforce chairman Allan Fels that her agency risked being viewed as a ­mediator rather than a regulator “and that we have been too cautious in our use of enforcement tools”.

Ms Parker said the FWO had been given increased powers and more resources by the federal government, “so it’s on us to send a strong message of deterrence to would-be law-breakers”.

In a speech in Canberra today, she will tell an audience of ­employers that she imagined they were “appalled” by the incidence of worker exploitation and the ­effect the exploitation had on business and community confidence.

Noting commissioner Kenneth Hayne and Professor Fels had both exhorted regulators to toughen up, she said Professor Fels also recommended the FWO use compliance notices more often when investigating employer underpayments. Fair Work inspectors issue compliance notices where an employer has not agreed to rectify a breach of the Fair Work Act. Failure to comply can result in penalties of up to $31,500 for a company and $6300 for an individual.

Ms Parker said the FWO had issued 176 compliance notices this financial year. “Moving forward, there is certainly a bigger role for compliance notices to address underpayments, breaches of awards and the National Employment Standards, where lesser tools might have been reached for in the past,’’ she said.

“Where an employer is issued with a compliance notice, the onus will be on them to get their house in order. We are going to simplify these notices so it’s easy for employers to understand what they need to do, but if they don’t comply with the terms of our compliance notice, the Fair Work Ombudsman won’t resile from taking them to court to seek penalties.”

Ms Parker said the bar should be higher again for larger, high-profile businesses that self-report non-compliance to the FWO “which has been occurring quite frequently of late”. “This might be the result of better corporate governance arrangements following the banking royal commission, and while this is a good thing, the law still needs to be upheld,’’ she said

“Our default position now is that an enforceable undertaking with the FWO will be required, as a minimum, and those enforceable undertakings will require the employer to meet the cost of getting their underpayments verified by experts contracted to the FWO, so that the burden of calculating what is owed is not put onto the taxpayer.

“Employers that self-report should also expect to make a contrition payment reflecting the seriousness of their contravening conduct, because it is simply not acceptable for businesses to throw their hands up when they’ve been underpaying workers and expect to move on without consequences once the backpay is in the workers’ accounts.”

Ms Parker said the consequences for businesses that “see a problem but don’t come forward will be far more significant”.

She said the agency’s priorities for next financial year would be fast-food restaurants and cafes; horticulture and the harvest trail; supply chain risks; franchisors; and sham contracting.

“The FWO will do its part but we also need consumers to put pressure on businesses through their choices,” she said.

“We are keen to empower consumers in the same way we wish to empower workers and business owners.”