The Fair Work Ombudsman – an industrial watchdog with teeth
Published on December 1, 2010
The WorkChoices legislation introduced by the Howard Government changed many aspects of Australian workplace law, and some of those changes have been retained by Labor. One of the significant changes has been the establishment of a large and well-resourced federal government agency charged with the tasks of ensuring compliance with workplace laws and the protection of employees’ entitlements – the Fair Work Ombudsman (or “FWO”), previously known as the Workplace Ombudsman. Prior to 2007, state and federal government workplace regulators tended to be under-resourced and their impact on Australia’s workplace culture and the rights of workers was limited. With the FWO now on the scene, that state of affairs has changed fundamentally.
The Fair Work Ombudsman is an independent regulator and investigator appointed by the federal government to investigate and enforce the provisions of the Fair Work Act. The FWO’s statutory position is, however, independent of government and the FWO can investigate complaints against all national system employers including the Commonwealth. The FWO has statutory power to investigate alleged breaches of the Fair Work Act, including the National Employment Standards (such as leave and notice entitlements), Award or Agreementbased pay rates and the General Protections (discrimination and workplace rights). Notably, the FWO also has the capacity to investigate employers’ prior contraventions of the now-repealed Workplace Relations Act. The FWO, through its appointed inspectors, has statutory power to attend workplaces, interview employees and request and collect employment records, in order to conduct its investigations. If an employer is found to be in default of its obligations under the Fair Work Act, the FWO can issue the employer with a contravention letter and/or a compliance notice. If the employer does not comply with the notice, the FWO may issue a fine or commence Court proceedings against the employer. Orders available in Court proceedings include the repayment of employees’ entitlements, compensation, injunctions, reinstatement and/ or penalties. Penalties range up to $6,600 for individuals and $33,000 for corporations and can be ordered in respect of each particular contravention proved against the employer.
It is important for employers to be aware that the FWO has the power to audit workplaces even where no complaint has been received. It may also take action against contraventions discovered in the course of its investigation of a complaint even though such contraventions do not relate to the original complaint. Accordingly, it is essential that employers are aware of their obligations under the Fair Work Act and remain in compliance with these obligations at all times.
To illustrate, the FWO has publicised its investigation into a number of 7-Eleven convenience stores in Victoria. Of 56 stores audited, the FWO concluded that 30% of these stores had contravened workplaces laws, with at least 42 contraventions committed by 17 stores. The contraventions FWO says it uncovered included employers’ failure to keep accurate and up-to-date time and wages records, non-supply of pay advices, and engaging in ongoing underpayment practices. FWO reports these investigations resulted in a significant number of compliance notices being issued with almost $33,000 in underpaid wages recovered for employees. Employer cooperation helped avoid prosecution action by FWO.
The Fair Work Ombudsman now has sufficient powers and resources to make it an effective watchdog and enforcer of employees’ rights. Recent cases have illustrated that the FWO is undertaking audits and investigations across a number of industries and occupations, for a host of reasons and suspected contraventions. As the FWO is able to investigate all aspects of an employer’s enterprise (without the need for any originating complaint), employers should take pro-active steps to ensure that they comply with their numerous obligations under the Fair Work Act, particularly the new National Employment Standards, and should ensure that their employee records are accurate and up-to-date. Carroll & O’Dea has had significant experience over the last few years representing employers in FWO investigations, which can arise from employee complaints, but most often from targeted industry audits. In our experience, the best defence for an employer to such investigations is by regularly checking workplace compliance through internal controls and regular informal audits.