Tools to Encourage Award Adherence

The Fair Work Ombudsman employs inspectors who have a range of investigatory powers, including the power to compel a person to produce records or documents and the power to enter premises and to make inspections.

Employers may be unknowingly (or knowingly) breaching workplace relations laws in matters involving payment of the correct wages, providing proper breaks, providing payslips or allowing annual or other leave.

The Fair Wok Ombudsman, under s716 of the Fair Work Act 2009 (Cth) can issue a compliance notice for an employer to fix a breach of an Australian workplace law. These are generally issued by Fair Work Inspectors when an employer does not co-operate with the inspector instead of starting legal proceedings.

An employer that is approached by inspectors may have to comply with FWO directions to act to fix matters, including such matters as paying wages in line with award obligations or providing proper pay slips. Providing the employer agrees (and provides proof of having done so), the employer will generally not receive a compliance notice.

However, should an employer be recalcitrant and not comply, compliance notices are a tool the Ombudsman has at its disposal to force an employer to abide by award and other industrial obligations.

Content of the notice

(3) The notice must also:

(a) set out the name of the person to whom the notice is given; and

(b) set out the name of the inspector who gave the notice; and

(c) set out brief details of the contravention; and

(d) explain that a failure to comply with the notice may contravene a civil remedy provision; and

(e) explain that the person may apply to the Federal Court, the Federal Circuit Court or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:

(i) the person has not committed a contravention set out in the notice;

(ii) the notice does not comply with subsection (2) or this subsection; and

(f) set out any other matters prescribed by the regulations.

Benefits of complying

Conforming to the compliance notice prevents the inspector from applying to a court for the imposition of the penalty or bringing proceedings under the civil remedy provisions.

The Ombudsman can withdraw a notice prior to a person complying with it.

A further benefit of compliance with the notice is that it is not taken to be an admission nor the basis of a finding of contravention (see s.716(4B)). An admission in court is very powerful as it means that the Ombudsman does not have to lead evidence about that point, so to comply does not mean that it can be used against an employer in court proceedings.

Hazards of not complying

In Fair Work Ombudsman v Extrados Solutions Pty Ltd & Anor [2014] FCCA 815 the Federal Circuit Court said after an employer refused to comply with a compliance notice:

“The obligation to comply with the Fair Work Act and, in particular, s.716 falls just as heavily on small business and small businesses – and individuals, for that matter – as it does on large employers or businesses. Put shortly, one cannot shirk one’s responsibilities imposed by law simply because one might be described as a “small business”, or because the business has a particular size. It is incumbent on all employers to comply with the requirements of the Fair Work Act.”

As an example, the Federal Circuit Court recently fined a company an additional $9000 and has warned those who receive compliance orders that they should have “no misapprehension about their obligations to comply with those notices”.

The judge described the employer’s “failure to comply with the notices properly issued…in the course of its investigations…is serious”.

The judge found that the employer had “ample opportunity to work towards a resolution of the issues dealt with in the notices” and avoid litigation.

Even though the employer paid the amount of the underpayments, the company’s demonstrated “lack of contrition, corrective action and willingness to co-operate” was a factor in the large penalty.

He ordered the employer to pay a penalty of $4845 for the first failure to comply with a notice, $3000 for second and $1155 for the third. The total of $9000 was 58 per cent of the maximum.

Penalties can also be ordered against a person who is an accessory to the contravention of the Australian workplace law.

Can I challenge the issuing of a compliance order?

An employer can challenge a compliance order in the Federal Court or Federal Circuit Court. In fact, some employers have done so, but it appears none have been successful in overturning a compliance order. So long as the Ombudsman has acted reasonably, then there would be no grounds to challenge the notice.