We reserve our statutory enforcement tools for cases of serious non-compliance, or those matters considered to be in the public interest. This might include instances where there is a blatant disregard of the law, exploitation of vulnerable workers, or systemic issues of non-compliance where there is a need for specific deterrence. Our Compliance and Enforcement Policy provides more detail of our approach.
In 2017-18, we used a total of 877 enforcement tools (including infringement notices, compliance notices, enforceable undertakings and litigations). Additionally, we sent 829 formal caution letters to employers, warning them to correct compliance issues that we had identified.
Infringement notices are on-the-spot fines we issue to employers for breaching record-keeping and pay slip requirements. Before issuing a notice, we consider 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. We issued 615 infringement notices in 2017-18 for a total amount of $397 341.
Compliance notices formally require a person to take specific action to fix alleged entitlement-based breaches of the Fair Work Act. Prior to issuing a compliance notice, the FWO takes the nature of the breach and the employer’s level of cooperation into consideration. Most contraventions are resolved voluntarily, without needing to issue a compliance notice. In 2017-18, we recovered more than $950 000 in unpaid wages through 220 compliance notices. If a notice is not complied with, the FWO takes action in court to enforce it. This can result in orders for remedial action and penalties. We initiated three 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 admits liability, expresses contrition and agrees to remedy breaches as well as secure ongoing future compliance. This is often through back-payment, training sessions for managers and independent wage audits. In 2017-18, we used enforceable undertakings seven times, recovering over $2.1 million in back-payments. Our largest enforceable undertaking for the year recovered $1.4 million in back-payments for over 1300 workers in a swim school franchise network. Copies of our enforceable undertakings are publicly available on our website, www.fairwork.gov.au.
Table 6: Enforcement outcomes 2017-18
|Enforcement tool 2017-18
|Infringement notices issued
|Compliance notices issued
|Enforceable undertakings executed
Our approach to litigation is based on the agency's key areas of strategic focus. In considering whether to commence legal proceedings, we focus on those that will deliver maximum impact to a particular industry, sub-sector or region. This assessment also involves consideration of our capacity to seek higher penalties under the new provisions relating to protecting vulnerable workers.
In 2017-18, we initiated 35 litigations and achieved over $7.2 million court-ordered penalties ($5.8 million against companies and $1.4 million against individuals). This is the highest amount of penalties we have ever secured in a financial year (a 46% increase from the previous highest amount of $4 864 925 in 2016-17). This rise in court-ordered penalties reflects the increasing complexity and significance of matters we are filing, as well as the court’s growing intolerance for exploitative conduct against vulnerable workers. As at 30 June 2018, the FWO had 85 matters before the courts.
Figure 2: Penalties ordered, 2015-2018
In 2017-18, we achieved a number of significant litigation outcomes in matters where there was a high level of public interest.
First racial discrimination case
FWO’s first racial discrimination case involved the exploitation of two Malaysian employees who were discriminated against because of their racial background. The former operators of a Tasmanian hotel treated the Malaysian employees differently to other staff members, paying them less and requiring them to work longer hours. The court found that the employees' Malaysian-Chinese background was a 'substantial and operative reason' for being discriminated against, ordering over $210 000 in penalties.
We used accessorial liability laws to hold professional services providers to account for deliberate exploitation of workers. One case involved holding an accounting firm, which provided payroll services for an employer, to account for the underpayment of two workers on 417 working holiday visas. The underpayments continued to occur even after the FWO identified and provided notice to the employer and accounting firm regarding the underpayments. In the decision, the Judge stated that the firm 'had a responsibility to ensure there was compliance with … the Fair Work Act.' The decision was upheld on appeal. In a separate case, the FWO was also successful in using accessorial liability laws to hold a HR manager of a business to account.
First Paid Parental Leave legal action
In another first, we took legal action against an employer who failed to transfer the Australian Government's Paid Parental Leave funds to an employee. The affected employee was on a 487 skilled visa. After she had a child, the Department of Human Services (DHS) transferred her paid parental leave to her employer, Noorpreet Pty Ltd, to transfer to her. After many unsuccessful attempts by the employee to retrieve her payment, DHS referred her to us to resolve the matter. During the investigation, Noorpreet's director provided a FWO Inspector with a false document that claimed the company had already paid the parental leave payment to the employee's husband, in cash. The court found the company and the director had engaged in 'deliberate deception'. Stating that deterrence against the employer’s conduct guided his decision, the Judge issued penalties of nearly $120 000 to the company and the director (who were also found to have engaged in several record-keeping and pay slip contraventions).
New record for highest total penalties ordered
A record of the total penalties ordered in a proceeding was set during 2017-18. Total combined penalties of $660 020 was ordered in the matter Fair Work Ombudsman v Mhoney Pty Ltd & Anor. This case involved significant underpayments and exploitation of a shop assistant in a fruit and vegetable shop. The employee was a migrant worker who had recently arrived in Australia and lacked fluency in English.
We also secured our highest penalties for a legal action in Western Australia, and our third-highest penalties nationally, in the matter Fair Work Ombudsman v Commercial and Residential Cleaning Group Pty Ltd, Catherine Paino-Povey and Mark Povey. This case involved a contract cleaning company that exploited three Taiwanese workers on 417 working holiday visas, with one employee paid just a third of what she was entitled to for two months of work. The operators, a husband and wife, had previously been penalised in 2013 for running another cleaning company that also exploited local and overseas workers. In this case, the judge ordered total penalties of $510 840 against both the company and the operators, citing that the high penalties were imposed to deter the husband and wife from re-offending.
Gender equity in briefings
In 2017-18, we remained committed to the Law Council of Australia’s Equitable Briefing Policy, which aims to improve gender equality in the number of briefs to barristers across the country. In 2017-18, the FWO briefed female counsel 55 times (61%) and male counsel 35 times (39%).
Government Lawyer of the Year
Phoebe Nicholas, Principal Lawyer with FWO, won the Government Lawyer of the Year Award at the 2018 Victorian Legal Awards, hosted by the Law Institute of Victoria. The win recognises the important legal work that Phoebe has led at the FWO, including the Inquiry into 7-Eleven franchises, FWO’s Compliance Partnership with Woolworths trolley collecting supply chain, and FWO’s first racial discrimination matter.