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Year in review

Image of Natalie James Fair Work Ombudsman

There were two prevailing themes for the Fair Work Ombudsman (FWO) in 2015-16:

  • our determination to use every avenue in addressing exploitation of vulnerable workers, particularly migrant workers
  • the continuing enhancement of our services to support business and workers to understand and comply with the complexities of employment regulation.

While the first dominated the headlines, the second was central to the nature of the service we delivered through over 25 million customer interactions in 2015-16 helping us help them take control of their workplace situation and resolve problems or questions quickly, before they escalate into more formal disputes. 

Increased community and media attention around vulnerable/migrant workers

The 2015-16 year saw increasing community concern about the exploitation of vulnerable workers by unscrupulous employers. As the number of temporary working visa holders grows in Australia to approximately 7%1 of the workforce, so too does the number of visa workers coming to the FWO for help. Visa holders accounted for 13% of dispute forms lodged with the FWO, up from 11% the previous year. And the FWO is recovering entitlements for more people in this group, with a 41% increase in 2015-16 (from 488 to 687 workers). We recovered over $3 million for these visa holders, compared to $1.6 million in 2014-15 and $1.1 million in 2013-14.

Figure 1: The proportion of visa workers in Australia compared to the FWO’s formal interactions in 2015-16

Figure 1 shows the proportion of visa workers in Australia compared to the Fwo

This group has always been a priority for the FWO. This is because of the cohort’s vulnerability– they are often young and have limited English skills. New to our country, they commonly don’t have a high understanding of the rules that apply in workplaces or where to get help if they are unsure. Cultural barriers to seeking help and concerns about their visa status inhibit their capacity to seek help or enforce their rights.

They also, sadly, feature in the worst examples of worker exploitation that we see. This is why once again, they are over-represented in our enforcement activities. A startling 76% of our court actions involved a visa holder. This is an increase on last year, where the figure was 46%.

In the last 12 months, media coverage and parliamentary scrutiny exposed disturbing stories of deliberate worker exploitation and shone a light on the FWO’s work in this area – both our successes in enforcing the law and the limitations of the framework.

Our Baiada Poultry and 7-Eleven inquiries identified serious deficiencies in the companies’ supply chains and network, creating an environment where exploitation of vulnerable workers was inevitable. The widespread coverage and the public reaction that followed demonstrated the standard the community expects from established, profitable businesses when it comes to its labour force. Both businesses acted to take responsibility for workers’ in their supply chain/network after our intervention, implementing practices to ensure that they have line of sight to the workers’ entitlements, even though they are not the direct employers.

Responsibility for non-compliance

Our most recent inquiries into systemic non-compliance including Baiada Poultry, 7-Eleven, Woolworths trolley collection services and procurement of housekeepers by four-and-five-star hotel groups have revealed a strong correlation between the outsourcing of low skilled work, the prevalence of vulnerable workers in such labour markets, and worker exploitation.

This is also a feature of the early findings in our ongoing inquiries into the harvest trail and subclass 417 working holiday visa program, with reports to be released next year.

Encouraging businesses to take responsibility for their supply chains and networks, and fully utilising our accessorial liability provisions are essential tools in building a culture of compliance with workplace laws. Nearly every matter we filed in court—92%—roped in an accessory (a party other than the employer who played a role in the exploitation of workers). In 2015-16 this included accountants and human resource managers.

By pursuing accessories, we can seek penalties from individuals involved in the conduct, irrespective of whether the corporate employer is still operating, or has money in the bank. And after the recent precedent-making case of FWO v Step Ahead Security Service Pty Ltd & Anor, we can now also recoup back-payments from accessories, making them directly accountable for underpayments in which they were involved.

Where directors have been involved in serious breaches of workplace laws, we also refer the matter to the Australian Securities and Investments Commission (ASIC) for their consideration as to the application of corporation law.

Working with other government agencies

Combatting migrant worker exploitation requires Government to address a range of systemic issues across a number of elements of our regulatory framework, including workplace relations, migration and corporation law. Challenges include the ease with which corporate employers can ‘phoenix’ out of their responsibilities, the capacity of unscrupulous operators to leverage concerns about the future of a worker’s visa and the financial advantage gained by unlawfully reducing labour costs relative to the maximum penalties under the Fair Work Act 2009 (Fair Work Act).

This year we have worked hard to leverage all the Government’s program and laws to tackle worker exploitation, including:

  • as a foundation member of Taskforce Cadena
  • by presenting four times at the senate inquiry into temporary work visa workers
  • by participating in the Protecting Vulnerable Visa Holders Ministerial Working Group
  • through the Inter-Agency Phoenix Forum and the Phoenix Taskforce
  • by engaging with and referring relevant matters to the Australian Taxation Office (ATO), ASIC and the Australian Competition and Consumer Commission (ACCC).

Partnering like this allows us to share intelligence and leverage connections within government to increase our effectiveness and, ultimately, deliver better outcomes for the public.

Launching the Anonymous Report tool

I was pleased to launch our new online Anonymous Report tool in April 2016. This functionality enables members of the community – workers, consumers, concerned citizens, businesses, anyone – to alert us to potential non-compliance without identifying themselves.

Anonymous tip-offs provided to us in the past as part of our campaigns and inquiries have given us valuable intelligence. Now we have a clear mechanism through which people can provide this information, with the comfort that they need not disclose their identity and that it will be put to good use. In its first three months, we received 1713 anonymous reports. Of these, 77% raised concerns about rates of pay, predominantly underpayment of hourly rates, non-payment of wages and penalty rates. Almost 70% of reports identified the affected workers as having one or more vulnerabilities, predominantly those of being a young worker, a student, a mature-aged worker and/or a visa holder.

The information we collect will be analysed for trends and patterns, which will in turn generate leads for our education and compliance areas to review. The FWO will treat this intelligence in accordance with our publicly available compliance and enforcement policy. We have always distinguished between honest mistakes by those grappling with a complex system and deliberate non-compliance with workplace laws, and we will continue to take a reasonable and proportionate approach to resolving matters.

Young workers

Migrant workers are not the only group over-represented in our data. Workers under the age of 26 continue to account for one in every four dispute forms the FWO receives. Young people in their early working life often need extra support navigating the system, and our Young Workers Team continued to play an essential role supporting FWO’s work with this cohort.

Figure 2: The proportion of young workers in Australia2 compared to the FWO’s formal interactions in 2015-16

Figure 2 Annual Report 2015-16

Notes: *26% of workplace dispute forms finalised within the 2015-16 financial year involved 15 – 25 year olds (the FWO’s definition of a young worker)

**22% of workplace dispute forms finalised within the 2015-16 financial year involved 15 – 24 years olds (the ABS definition of a young worker)

Hospitality industry

Hospitality workers also feature at the top of a number of FWO’s lists. This industry makes up approximately 7%3 of the working population and almost half4 of hospitality workers are aged between 15 and 24 years.

In 2015-16 workers in the hospitality industry accounted for the highest number of dispute forms from a single industry (16%) and 35.7% of anonymous reports. It’s a worrying early trend that the percentage of anonymous reports is more than double the proportion of dispute forms, suggesting many workers are afraid to formally report their concerns.

Figure 3: The proportion of hospitality workers in Australia compared to the FWO’s formal interactions in 2015-16

Figure 3 shows the proportion of hospitality workers in Australia compared to the FWo

The hospitality industry also featured in over a third of our court actions (34%) and nearly half of our enforceable undertakings (45%).

It is encouraging that this industry features highly in our phone and My account queries (10%), suggesting people are seeking the information they need.

Our takeaway foods phase of the National Hospitality Campaign exposed a dismal 33% compliance rate among the businesses audited. This campaign revealed widespread underpayment of base rates and penalties.

Results for other parts of the sector were not as alarming. There was a 42% compliance rate for the restaurants, cafes and catering phase and a 69% compliance rate for accommodation, pubs, taverns and bars. However, with an overall compliance rate for the industry of just 48%, one wonders how those businesses doing the right thing are able to compete. Given the average compliance rate for our campaigns is 61%, it is clear that this industry has work to do, and we will be looking for industry leaders to step up and work with us to enhance understanding of and compliance with workplace laws throughout hospitality.

Innovation and technology

Most employers who come to the FWO want to do the right thing. Most problems arise because of misunderstandings about the application of the law, rather than a blatant disregard for it.

We help millions every year, and we want to reach more people. We are improving our operating model to meet this increased demand, make compliance easy, and equip employees and employers with the knowledge to make good choices in their workplace.

To achieve this, we are innovating in two core streams: digital services and tailored solutions focusing on early intervention. Leveraging data and intelligence and technology is driving our success. Technology is helping overcome complexity, enabling us to reach and assist customers in increasingly tailored ways, when and where they choose. In 2015-16 we invested in capital funding to build and maintain the systems to support this operating model, and it is paying off.

Our customers are accessing our 'anytime, anywhere' digital services in record numbers. During the year we responded to 72% more online enquiries. Our greatest success to date has been transforming our wage enquiries, which have historically made up the largest proportion of phone enquiries, into an effective digital service. Since releasing our Pay and Conditions Tool (PACT) in May 2015, there has been a 66% increase in calculations obtained (totalling over five million calculations) from the use of our online pay tools. This has allowed our more resource intensive phone service to focus on more complicated enquiries, further improving this service for our customers.

Over 74% of the workplace relations matters brought to us in 2015-16 were resolved by assisting employers and employees to find their own solutions without the need for compliance or enforcement action, and led to over $15 million in back-payment. Our early intervention model is driving this success, with a 39% increase in customers assisted through the service in 2015-16 and a 25% decrease in dispute form lodgements. Most matters dealt with through early intervention are resolved within six days, compared to 131 days to resolve disputes through compliance and enforcement action. We are resolving more customers’ workplace issues before they become disputes, reducing the impost on time-poor small businesses and helping to maintain employment relationships.

Supporting small business

We continue to support small business to comply with workplace laws and work with other government and industry bodies to ensure we are meeting the needs of small business employers.

This year, we participated in the Small Business and Franchising Consultative Committee, established by the ACCC, to address issues affecting the small business and franchising sectors under competition and consumer law.

We also coordinated joined-up activities and strategies with other government agencies through the Federal Regulatory Agency Group, convened by the Australian Small Business and Family Enterprise Ombudsman.

Our research tells us the majority of small businesses want to understand what they need to do to fulfil their employment obligations, and we are focused on getting them what they need in a form that is accessible and useful.

The year ahead

FWO will continue to augment our customer services. In particular, developing digital solutions to support people to understand the rules and make good choices in their workplaces.

We will be launching our Library – a new online resource providing enhanced information to our customers. This additional information will be integrated into our website. It is the same material our experienced advisers draw on to help customers over the phone. Making more information available about award operation will assist people to understand and comply with the law.

I welcome the Government’s proposed reforms to the Fair Work Act and we look forward to working together in framing effective and appropriately balanced amendments.

While there is no one solution to ensure compliance with Australia’s workplace laws, we anticipate the Government’s commitment to enhance the investigative abilities of the FWO and to increase penalties under the Fair Work Act will greatly assist us in gathering evidence and deterring non-compliance with workplace laws.

We also look forward to contributing to the recently announced Migrant Worker Taskforce.

Working within Government and engaging with communities is as critical as ensuring our enforcement tools provide a sufficient deterrent. For some time now the FWO has seen vulnerable migrant workers being exploited by businesses that are operated by recent arrivals. We are seeing rates of pay that are sometimes less than $10 an hour, well below the minimum wage of $17.70 per hour. And we hear employers say they were paying the ‘going rate’ for workers from that community.

The idea that migrant workers can be paid less than ‘Aussies’ is abhorrent and clearly, legally wrong.

FWO needs to engage with communities to send a clear message that this is not acceptable. To prioritise and coordinate this critical work with migrant workers and stakeholders, we have established a Migrant Worker Strategy & Engagement Branch. We have started with the large Chinese community, launching our Chinese Australian Engagement Strategy in January 2016. As part of this strategy, we have been working closely with business and media representatives to help raise awareness among Chinese employees and employers of their workplace rights and obligations.

Next year we will continue to build on our early work engaging with the Chinese community. This will include working with more than 50 local councils that represent large Chinese communities in both Sydney and Melbourne. We will also take a proactive approach to engaging with other communities, including the Korean community, as collaborators and partners in order to overcome barriers to compliance with workplace laws.

Our Corporate Plan for 2016-17 makes it clear that we will continue prioritising cohorts that evidence tells us need the most help to understand and apply workplace laws. We will focus on systemic non-compliance, which is significantly impacting vulnerable individuals and/or a significant sector of the labour market. This includes supporting small business to comply and focusing on vulnerable cohorts, in particular, migrant and young workers. Industries or subsectors with high levels of non-compliance such as hospitality, retail, cleaning, security and trolley collecting will also be prioritised.

We all have a part to play in compliance–employers, employees, community groups, industrial advisers and government agencies. There are many opportunities for us to draw on our mutual interests: to see employers do the right thing, avoid a nasty back-payment bill, ensure a level playing field for all business and to build a culture of compliance.

Signature of Fair Work Ombudsman Natalie James

Natalie James

Fair Work Ombudsman

  1. The Productivity Commission reported a 6.5% figure in its review of the Australian workplace relations framework external-icon.png, dated June 2014, but there are other indications the percentage is higher. The senate inquiry into temporary work visa holders (Education and Employment References Committee) report 'A National Disgrace: The Exploitation of Temporary Work Visa Holders' found temporary visa workers made up 11.7% of the working population, dated March 2016.
  2. Australian Bureau of Statistics (ABS) labour force survey external-icon.png (6202.0 - Labour Force, Australia, June 2016, trend)
  3. Department of Employment, labour market information portal, industry information external-icon.png, derived from ABS labour force survey (ABS, Labour Force, Australia, Detailed, Quarterly, cat. no. 6291.0.55.003, trend), 2016
  4. Industry Outlook – Accommodation and Food Services external-icon.png, Labour Market Research and Analysis Branch, Department of Employment, 2014