Compliance with workplace laws has been a hot topic for more than five years now, with the ‘wage theft’ moniker having become very much part of the vernacular and multiple government inquiries recommending that criminal offences be introduced for wage theft.
Against that backdrop, the last five years has also heralded in a sweeping change in approach from the national regulator, the Fair Work Ombudsman (FWO), when dealing with complaints about potential underpayments.
In years gone by, the FWO’s default method was to use mediation and other informal approaches to resolve disputes, unless there was a clear reason why that was inappropriate (for example, where the complaint involved visa holders or other vulnerable workers). However, in more recent times, that informal dispute resolution approach has largely been replaced with a much stronger regulatory response including investigation and enforcement action.
The FWO has a range of compliance and enforcement tools available to it where it considers non-compliance to have occurred, including the power to enter premises, require the production of documents, require persons to answer questions, as well as the ability to issue infringement notices, compliance notices, enter into enforceable undertakings and prosecution through the courts.
This change in regulatory approach has been quite a deliberate strategy from the Ombudsman. In a recent speech, the Deputy Fair Work Ombudsman, Kristen Hannah, confirmed the regulator’s “strengthened compliance and enforcement approach” and mentioned the year-on-year increase in their use of compliance tools.
However, when one looks at the FWO Annual Reports over the past five years, the surge in enforcement activity is quite remarkable.
||Compliance Notices issued
The data shows a significant increase across the board in the regulator’s enforcement activities. In particular, there has been a staggering 10-fold increase over the past five years in the number of compliance notices that have been issued to employers.
Compliance notices are a particularly powerful tool and are worthy of closer attention.
The FWO describes compliance notices as “an efficient tool for addressing and rectifying suspected breaches and ensuring underpaid wages are quickly back-paid to employees”. The FWO have also made it clear that compliance notices are now their “primary enforcement tool”.
The FWO can issue a compliance notice where a Fair Work Inspector “reasonably believes” an employer has contravened workplace laws. A compliance notice is a written notice requiring an employer to fix alleged contraventions within a specified timeframe. Failure to comply with a compliance notice constitutes a breach of section 716 of the Fair Work Act and normally results in prosecution (both for the original alleged non-compliance issue as well as for the failure to comply with the compliance notice).
Where an employer denies any contravention and disagrees with the compliance notice, the process for challenging its validity is problematic. In short, it requires the employer to undertake the costly exercise of applying to the Federal Court or Federal Circuit and Family Court and demonstrating to the Court that the employer did not contravene workplace laws. In effect, the employer has the onus of disproving the allegation, rather than the FWO having to substantiate the alleged contravention. This is inconsistent with the usual legal standards that apply when it comes to alleged breaches of the NES and modern awards.
The FWO has often described compliance notices as a ‘friendlier’ alternative to commencing a prosecution and taking an employer to court. Ironically, however, employers would in many respects be in a better position if they were subjected to prosecution through the courts. In prosecution proceedings:
- the FWO bears the onus of proving the contravention to the relevant standards (being the balance of probabilities)
- the employer is able to see the evidence relied on by the FWO in support of the allegations (such as witness statements and other documents)
- the employer is able to interrogate, test and respond to the evidence relied upon by the FWO (including by cross-examining complainants) and
- the matter is ultimately determined by a Judge who is obliged to provide a fair hearing, apply the rules of evidence and resolve the matter according to law.
It’s perhaps not surprising that compliance notices are the FWO’s preferred enforcement tool and seen as an “efficient tool”.
And while there is clear public interest in having workplace disputes resolved quickly and informally (without taking up the resources of the courts), the FWO’s move away from the more conciliatory approach of mediation represents a significant development in our workplace relations regulatory environment.
Given that shift, and the staggering increase in the number of compliance notices issued, the peculiar and unconventional way in which they operate should be acknowledged.
Employers should be mindful of this dynamic, also seek early specialist advice when dealing with compliance matters or engaging with the Fair Work Ombudsman.
If you need advice in this area please contact us at firstname.lastname@example.org.