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Enforcement outcomes

Enforcement action is reserved for serious non-compliance. Matters may involve exploitation of vulnerable workers, blatant disregard for the law or the need for a strong deterrence message.

When deciding how to respond to breaches of workplace laws, a range of relevant factors are considered. The FWO Compliance and Enforcement Policy explains our approach, which includes use of four enforcement tools available to us under the Fair Work Act.

Table 6: Enforcement outcomes, 2014-16
Enforcement tool 2015-16 2014-15
Infringement notices issued 573 348
Compliance notices issued 186 118
Enforceable undertakings executed 43 42
Litigations commenced 50 50
Total 852 558

Small claims assistance

FWO assisted over 1000 people to pursue their small claims directly before the courts in 2015-16. We helped workers and employers to complete court documents. Our small claims guide was made available through the courts and our explanatory videos received 18 381 views during the year.

Additional assistance was offered to people with barriers to taking action, such as those from culturally or linguistically diverse backgrounds, or with low literacy.

In 2015-16, more than $960 620 was awarded for the 180 applicants we assisted to make small claims. FWO lawyers also appeared in over 300 small claims matters as a ‘friend of the court’. In this capacity we don’t act for either party, but can assist the parties and the court on points of law or practice.

Infringement notices

Infringement notices are on-the-spot penalties for record-keeping or pay slip contraventions – evidentiary items regarded as the ‘bedrock of compliance’. In the first instance, we educated those who made mistakes and resolved issues voluntarily. This means not every contravention led to an infringement notice.

Before issuing a notice, we considered the employer’s previous compliance history as well as how much their lack of record-keeping impacts our ability to find, calculate and recover entitlements.

In 2015-16, we issued more than 570 infringement notices, up from 348 in 2014-15. Of these, almost 170 were issued digitally, reducing costs and improving efficiency.

The increase in the overall number of notices issued reflects our enhanced monitoring capability through the work we performed on behalf of the DIBP concerning subclass 457 visa holders.

Compliance notices

Compliance notices require a person to do certain things to fix alleged entitlement-based breaches of the Fair Work Act. Notices are usually issued where an employer hasn’t agreed to, or we suspect won’t, rectify the matter.

Prior to the issuing of a compliance notice, the FWO takes the nature of the breach and the employer’s level of cooperation into consideration. Most contraventions were resolved voluntarily, without needing to issue a compliance notice.

We’re increasingly using notices to recover unpaid wages efficiently, with more than $1 300 790 recovered through over 180 compliance notices issued in 2015-16. Up 58% from 2014-15, the increase in compliance notices issued reflects our experience in ensuring enforcement responses are both reasonable and proportionate.

Non-compliance with these notices is actionable in a court and can result in penalties. We initiated five litigations against employers alleging they failed to comply with their notice. In one case, a penalty of $16 830 was handed down for failure to back-pay more than $22 320 in unpaid employee entitlements. In each case, the FWO made extensive efforts to facilitate back-payments before launching court action.

The accommodation and food services industry accounts for the highest percentage of infringement and compliance notices issued and enforceable undertakings executed.

Enforceable undertakings

Enforceable undertakings are legally-binding documents that set out a company’s written commitment to address contraventions and prevent future breaches. This is often through back-payment, training sessions for managers and independent wage audits.

In 2015-16, more than 40 employers acknowledged they had breached the law, accepted responsibility and agreed to cooperate with us to fix the issues by entering into an enforceable undertaking.

Almost half (43%) related to visa workers, compared to 35% in 2014-15. Over $4 million in back-payments were recovered through all enforceable undertakings.

Copies of our enforceable undertakings are publicly available on the FWO website.

Litigation

Court action is reserved for the most serious instances of non-compliance.

Cases typically involve deliberate exploitation of vulnerable workers, refusal of an employer to cooperate with the FWO or a significant history of non-compliance. Our Litigation Policy is available on the FWO website.

In 2015-16, we initiated 50 civil penalty litigations. The majority (66%) concerned wages and conditions and, of these, 30% also alleged pay slip and record-keeping contraventions. Two of these litigations involved trolley collection services in Woolworths supply chains and five were 7-Eleven matters.

Of the litigations commenced, 76% involved visa workers and 44% involved young workers.

The sectors with the highest number of litigated matters were the restaurant industry (22%), retail (16%) and cleaning (14%).

Table 7: Types of civil penalty litigations commenced, 2014-16
Main contravention type 2015-16 2014-15
Adverse action 0 2
Discrimination 0 1
Failure to comply with a compliance notice 5 8
Failure to comply with a notice to produce 1 3
Failure to comply with an Order of the Fair Work Commission 2 6
Industrial action 2 0
Record-keeping and payslips 4 3
Sham contracting 3 6
Wages and conditions  23 21
Wages and conditions and record-keeping 10 0

There were 44 matters finalised in court, 41 of these were commenced in previous financial years. We secured more than $2.9 million in court-ordered penalties.

Table 8: Civil penalty litigations and outcomes, 2014-16
Court action 2015-16 2014-15
Civil litigations commenced 50 50
Penalty decisions 41 33
Penalties awarded $2 918 643 $2 380 638
Underpayments recovered $1 411 910 $863 847

In 2015-16, we were involved in several test cases to clarify the operation of the Fair Work Act, including two High Court matters.

  • Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd clarified the law regarding sham contracting with the court agreeing an employer attempted to change employees into independent contractors through a third party to avoid statutory obligations.
  • Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Construction, Forestry, Mining and Energy Union (CFMEU) v Director, Fair Work Building Industry Inspectorate resulted in a decision allowing the Commonwealth to continue providing courts with its view on appropriate penalty levels in civil litigation.

A director was ordered to personally back-pay almost $22 780 following our legal action, setting a new precedent and deterring other employers from winding up companies to avoid their lawful obligations.

In 2015-16, 46 civil penalty litigations commenced involved an accessory – a company or individual other than the employing entity who was involved in the contravention. Penalties of more than $684 820 were ordered against individuals named as accessories during the year, including directors, a union assistant secretary and human resource officer. A further $35 400 was ordered against businesses, including a security company that was an accessory to the breaches of its underpaying subcontractor.

Seven initiated matters involved companies that contracted work to other businesses, with over $70 000 recovered for workers throughout supply chains.

In addition to financial penalties, we sought court orders for back-pay or compensation, injunctions, and other requirements to rectify breaches. These included:

  • Freezing orders to prevent businesses and accessories from transferring assets. The assets of one company were frozen to the value of almost $84 600 in alleged underpayments during the year. The accessory named in these proceedings also had assets frozen to the value of $12 000.
  • An attachment of earnings order requiring a company director (accessory) to personally pay court-imposed penalties, with $500 a fortnight deducted from their earnings.
  • Injunctive orders to prevent a person from contravening the Fair Work Act in the future.
  • Corrective action orders, requiring parties to complete training and future audits to address non-compliance.
  • Orders requiring parties to notify the FWO if they planned to sell their business or acquire new businesses.

During 2015-16, we were also involved in eight debt recovery proceedings and three appeals.

We achieved a record $408 348 penalty against a 7-Eleven franchisee and its director during the year. The franchisee exploited international students by creating false employment records and running a scam requiring employees to return back-paid wages to their employer.