We use statutory enforcement tools in cases of serious non-compliance where other options such as dispute resolution or small claims are not appropriate to resolve the matter. We also use non-statutory tools such as letters of caution to provide formal warnings.
Matters where enforcement tools are used may involve blatant disregard for the law, exploitation of vulnerable workers, complex supply chains or networks where there is systemic non-compliance or the need for a strong deterrence message.
We find employers who have previously been involved in FWO matters are more likely to comply with workplace laws in the future. This is indicated by the 69% increase in compliance found through our program of re-auditing non-compliant employers, explained further in FWO-initiated activites: Audits of workplace records. Where the compliance of businesses doesn’t improve our response escalates with the use of enforcement tools.
Our use of enforcement outcomes has increased by 12% from 2015–16.
Table 4: Enforcement outcomes, 2015–17
|Infringement notices issued
|Compliance notices issued
|Enforceable undertakings executed
We also issued 883 letters of caution that warned employers if compliance issues were not fixed they may face enforcement action.
Infringement notices are on-the-spot penalties for record-keeping or pay slip contraventions. In the first instance, we provided those who made errors with the correct advice and required them to implement compliant record-keeping practices.
When issuing a notice, we considered the employer’s previous compliance history as well as how much their lack of record-keeping impacted our ability to find, calculate and recover entitlements.
In 2016–17 we issued 665 infringement notices, up from 573 in 2015–16.
Compliance notices formally 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.
In issuing a compliance notice, the FWO takes the nature of the breach and the employer’s level of cooperation into consideration.
More than $333 000 in unpaid wages was recovered through 192 compliance notices issued in 2016–17.
If a notice is not complied with, FWO takes action in court to enforce it. This can result in orders for remedial action and penalties. We initiated two litigations against employers alleging they failed to comply with notices. In each case, the FWO made extensive efforts to facilitate back-payments before launching court action.
Enforceable undertakings are legally-binding arrangements in which an employer agrees to address contraventions and prevent future breaches. This is often through back-payment, training sessions for managers and independent wage audits. Non-compliance with an enforceable undertaking can result in court action to enforce its terms.
In 2016–17, 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. Over $5.2 million in back-payments were recovered through enforceable undertakings.
Copies of our enforceable undertakings are publicly available on the FWO website.
The deliberate exploitation of vulnerable workers, refusal of an employer to cooperate with the FWO or a significant history of non-compliance may result in court action. Our Litigation Policy is available on the FWO website.
In 2016–17, we initiated 55 civil penalty litigations. Fifty matters were decided and these actions resulted in more than $4.8 million court-ordered penalties. As at 30 June 2017, the FWO had 101 matters before the courts.
The majority of litigations initiated (75%) concerned wages and conditions. Of these, 73% also alleged pay slip and record-keeping contraventions. In 19 matters we were unable to calculate all or some of the underpayments owed to employees due to insufficient records.
Sixteen (29%) of the litigations filed involve allegations of the creation of false or misleading workplace records. In one case, a record $532 910 in penalties was ordered against an Albury café owner and his company. In addition to providing fraudulent records, making threats of deportation and violence, and significant underpayments, the employer coerced two visa workers into paying back portions of their wages.
Table 5: Types of civil penalty litigations commenced 2015–17
|Main contravention type
|Wages and conditions and record-keeping
|Wages and conditions
|Failure to comply with a notice to produce
|Failure to comply with an Order of the FWC
|Failure to comply with a compliance notice
|Record-keeping and payslips
* Matters also involved record-keeping/payslip and/or wages and conditions contraventions.
In 2016–17, we were involved in several test cases to clarify operation of the Fair Work Act, including:
- Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd resulted in a decision that made it clear workers can’t be terminated in order to engage them as contractors on the same terms and conditions. The matter was run through the Federal Court, Full Federal Court, High Court and then back to the Federal Court to stop a loophole in the legislation that would have prevented the sham contracting provisions from operating effectively. Penalties of $58 740 were ordered in relation to the unlawful conduct.
- Fair Work Ombudsman v Blue Impression Pty Ltd & Ors established that accounting firm EZY Accounting 123 was accessorily liable for contraventions committed by their client in the fast food industry. The Court was satisfied that the accounting firm was provided the necessary information to meet the award obligations by the FWO but continued using its out-of-date system in contravention of the award.
In 2017, we committed to the Law Council of Australia’s Equitable Briefing Policy and identified, genuinely considered and engaged female barristers with relevant expertise or experience in a particular practice area. In 2016-17, the FWO briefed female counsel 59 times (63%) and male counsel 35 times (37%).
Table 6: Civil penalty litigations and outcomes 2015–17
|Civil litigations commenced
||$4 864 925
||$2 918 643
||$3 942 314
||$1 411 910
Our litigation program has seen us initiate increasingly complex litigations, involving more complainants and a wider range of contraventions. This has contributed to a progressive rise in penalties awarded over the last three financial years.
Figure 4: Total penalties awarded 2014–17
Penalties of more than $1.1 million were ordered against individuals named as accessories during the year. A further $3.7 million was ordered against businesses, including over $1.5 million against labour supply chains and labour hire companies. We pursued 48 directors, with 84% of matters put before the courts involving at least one director.
In addition to financial penalties, since 2014–15 we have sought court orders for the accessory to be responsible for underpayments in 27 matters, and have successfully obtained these orders in six of the seven cases decided in 2016–17. Twenty matters remain before the courts.
A $126 540 penalty and back payment of $60 000 to migrant workers was ordered against the director of cleaning company Brisclean Pty Ltd who deliberately misclassified four employees as independent contractors. A fifth employee was also exploited but their underpayment could not be quantified because of a lack of records. This decision set a record for the highest penalty to be awarded against an accessory.
A record for the total penalties ordered in a proceeding was also set during 2016–17. Total combined penalties of $532 910 was ordered in the matter Fair Work Ombudsman v Rubee Enterprises Pty Ltd. This case involved threats of violence, dismissal, withdrawal of support for the employee’s visa and demands that the employee pay back part of his wages in cash.
During the year we were also successful in seeking novel court orders to ensure employees receive wages owed to them and to facilitate future compliance. In one case, $447 300 in penalties and $223 000 in back-pay was ordered against a cleaning company. We proved in court that Grouped Property Services set up a shell labour hire company to employ 51 workers and avoid paying minimum entitlements. The company also required workers to obtain Australian Business Numbers (ABNs) and submit invoices for payment, and then paid the workers arbitrarily determined low flat rates that undercut minimum entitlements. In some instances the company paid them nothing at all.
At the litigation’s commencement the FWO secured a freezing order, preventing the company from being stripped of assets or placed into liquidation as this would have frustrated back-pay orders. The company was also subject to conduct audits, workplace training and restraining orders. This is the first time these types of orders have been made in the Federal Court.
We successfully obtained similar corrective action orders, requiring parties to complete workplace relations training in 14 other cases.
When a business doesn’t pay within the timeframe set by the court we file debt recovery proceedings to recoup outstanding underpayments and penalties. Debt recovery proceedings involve wind-up applications. When the court grants a wind-up order, a liquidator is appointed to distribute company assets to creditors including back-pay to workers.
During 2016–17, we were involved in six debt recovery proceedings and nine appeals.