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Non-compliance with industrial laws just got 15% more expensive

By Kristin Ramsey25 May 2017

The value of the Federal Penalty Unit is set to increase by approximately 15% from 1 July 2017.

In an employment context, this means that employers can be fined up to $63,000 per breach of the Fair Work Act, whilst individuals (such as directors, managers and others found to be “accessories”) can be personally fined up to $12,600 per breach.

Last year the Fair Work Ombudsman (FWO) ran an extensive audit campaign in the health care and social assistance industry (which includes aged care). Of the businesses audited, approximately 39% were found to be non-compliant.

If the large well-resourced providers can’t get it right, it is not surprising that smaller providers also struggle to remain fully compliant.

According to the FWO, some of the most common compliance issues arising in the sector relate to rostering and the engagement of part-time and casual employees. In our experience, a number of providers do not fully appreciate the rights and entitlements of part-time or casual employees, and this can lead to disputes and potential underpayments. Record keeping and payslip content also trip a number of providers up.

Risks if found to be non-compliant

Non-compliance comes at a high cost. In addition to having to make back payments, organisations and individuals involved in contraventions (such as directors, members of the executive and other managers) can be subjected to substantial fines - up to $63,000 per breach for employers and $12,600 per breach for individuals involved in such breaches.

In this respect, last financial year the FWO:

  1. recovered over $27 million in back pay for aggrieved workers;
  2. took enforcement action in respect of more than 850 organisations; and
  3. commenced legal action against almost 40 individuals involved in corporate contraventions which resulted in the imposition of just under three-quarters of a million dollars in fines.

These statistics are significantly higher than the previous financial year, and we expect them to rise again this year (particularly given an increasing in resourcing for the FWO).

What should we do?

Rather than wait for complaints to be made, or the FWO to come knocking, we strongly recommend that providers take positive action to audit their industrial practices to identify any potential areas of non-compliance. This will give the organisation an opportunity to rectify any issues and in turn minimise legal and reputational risks going forward.

How can Hynes Legal help?

Our Employment and Workplace Relations team are experts in this area and can conduct such an audit for a fixed fee. In addition to reviewing compliance issues, our fixed fee audit service involves a comprehensive business review designed to:

  • identify key risk areas in respect of an organisation’s industrial and workplace relations practices; and
  • make recommendations on strategies and actions to improve legislative compliance, workplace relations, productivity and efficiency.

If you would like more information about our audit service or would like to discuss any other employment, industrial relations or HR issue, please click here

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