We have repeatedly warned our clients for some time regarding the Fair Work Ombudsman’s (“FWO”) tougher approach to ensuring all businesses are complying with the Fair Work Act 2009 (Cth) (“FWA”) and/or the relevant industrial instruments. With the start of a new financial year approaching, the FWO does not seem to be slowing down any time soon.

Addressing the 2019 Annual National Policy Influence Reform Conference in Canberra last week, Fair Work Ombudsman, Sandra Parker pledged that the FWO would be taking a firm stance and will be sending a strong message to businesses with a tougher new approach going forward. This has followed recent criticism from the Migrant Worker Taskforce Report (provided in March 2019) which expressed the view that the FWO was too cautious in its use of enforcement tools and risked being viewed as a mediator rather than a regulator.

In particular, Ms Parker advised that the priority industries or issues for the FWO during 2019/2020 will be fast food, restaurants and cafes; horticulture and the harvest trail; supply chain risks; franchisors and sham contracting. Ms Parker stated that “if you are in one of these industries, operate a franchise system or employ large numbers of migrant workers, you should probably expect to hear from us.”

Furthermore, Ms Parker foreshadowed a tougher approach to compliance and enforcement on businesses and in particular the fast food, restaurant and café industries (also known as the FRAC sector). By way of background, the FWO had issued more than five times the amount of compliance notices and more than six times the amount of infringements notices to the FRAC sector compared to any other industry group and as such, is a clear focal point for the FWO going forward. Relatedly, since the launch of the FWO’s Anonymous reporting tool, the FWO has received almost 10,000 tip offs about non-compliance in the hospitality industry alone.

Ms Parker also noted that the FWO would be tougher in their approach to larger, high profile businesses that self-report non-compliance to the FWO which has become an increased trend of late. Ms Parker stated it was “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 back pay is in the worker’s accounts”. In these circumstances, Ms Parker stated the FWO’s default position will be for the business to enter into Enforceable Undertakings with the FWO. It will also require the business to meet the cost of getting their underpayments verified by experts contracted to the FWO, so that the burden of calculating underpayments is not put onto the taxpayer. In addition, the FWO would also expect a contrition payment to reflect the seriousness of the contravening conduct and the FWO can use their new powers to publicly name and shame employers who break the law in an effort to enforce the message that it is not acceptable to underpay workers or deprive workers of their entitlements.

Steps you should take as an employer

Given the FWO’s new tougher approach, it is now more critical than ever for employers to ensure that they have reviewed, implemented and are consistently following correct processes and practices for their business. Employers should consider and review the following within their business:

  • Review whether you are applying the correct Modern Award or relevant industrial instrument to your employees;
  • If you have an Enterprise Agreement in place, review whether the agreement has expired and/or whether it is still complying with the minimum employment requirements;
  • Ensure your business record keeping practices are up to date and in order;
  • Ensure you are providing appropriate payslips to employees (these should include the record of superannuation and leave accruals);
  • If you are a franchisor or holding company, ensure your franchisee or subsidiaries are compliant with their workplace obligations;
  • Ensure correct wages, penalty rates and allowances are being paid to employees (including minimum engagement payments, overtime and leave loadings);
  • Ensure you are paying correct superannuation, tax and employee entitlements; and
  • Provide proper and adequate employment contracts to your employees.

Employment changes from 1 July 2019

Lastly, the beginning of the financial year also marks a number of important changes to the employment law arena. Specifically, these changes, relate to minimum wages, penalty rates, the unfair dismissal threshold and the Fair Work Information Statement. A summary of the changes to come into force from 1 July 2019 are outlined below:

Annual wage review

On 30 May 2019, the Fair Work Commission handed down a decision in the Annual Wage Review for 2019/2020. The decision will increase the national minimum wage and modern award minimum wages by 3% from the first full pay period on or after 1 July 2019. This means the current weekly minimum wage will increase to $740.80 per week or $19.49 per hour.

The minimum Modern Award rates will also increase accordingly. Employers must take note of the increased rates and apply them from 1 July 2019.

New high-income threshold

The Fair Work Commission has announced the new high-income threshold will be $148,700 per annum excluding superannuation from 1 July 2019 (up from $145,400). The threshold is relevant for the purposes of:

  • Protection from unfair dismissal – an employee not covered by an award or statutory workplace agreement, does not have access to the Federal unfair dismissal jurisdiction if their annual rate of earnings exceeds the high-income threshold;
  • Maximum compensation for unfair dismissal claim – the maximum compensation which might be awarded by the Fair Work Commission for a successful unfair dismissal claim will half the amount of the high-income threshold;
  • Considering whether a modern award applies to an employee – a modern award, that would otherwise apply to an employee, does not apply where the employee is a high-income employee with a guarantee of annual earnings.

New Fair Work Information Statement

Although it seems the Fair Work Ombudsman has not yet updated the Fair Work Information Statement online, the Statement will be updated and published on or before 1 July 2019. In this regard, it is a requirement under the FWA that a national system employer provides each employee a copy of the Fair Work Information Statement before, or as soon as practicable after, the employee commences employment.

We will continue to keep our clients updated as to any further upcoming changes. However, in the meantime, we suggest employers review the current wages being paid to their employees and take proactive steps to ensure compliance with the new changes which come into force on 1 July 2019.

If you wish to discuss any aspect of this article or require specialist advice or assistance in relation to an employment law matter, please do not hesitate to contact us.

This alert is not intended to constitute, and should not be treated as, legal advice.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article