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EI Legal is frequently called to assist clients who are subject to investigations by the Fair Work Ombudsman, the Federal Government’s workplace regulator who has wide powers to investigate allegations of underpayments and other breaches of workplace law.

 

When would a compliance notice be issued?

Often such matters arise when the Fair Work Ombudsman conducts an investigation into an employer’s business after receiving a complaint from a former employee with respect to unpaid entitlements.

If the Fair Work Ombudsman finds that such underpayments exist, they may issue the employer with a “compliance notice” requiring the employer to calculate and rectify the entitlements owing to the employee and provide reasonable evidence of the compliance within a stipulated time.

On occasion, employers will fail to comply with the compliance notice. For example, they may operate a small business with limited financial resources, and have little experience in employee related matters and have no prior dealings with the Fair Work Ombudsman. In those cases, the employer may not understand the role or authority of the Fair Work Ombudsman or the implications of failing to comply with a compliance notice.

If the employer does not take the steps required under the compliance notice, the Fair Work Ombudsman is able to commence court proceedings against the employer alleging that the employer contravened section 716(5) of the Fair Work Act 2009 (the Act) for failing to comply with the compliance notice. They may also include in their claim an action against a director (or another person) personally, if they consider the person was “knowingly involved” in the employer’s contraventions within the meaning of section 550(1) of the Act.

 

The importance of adhering to a compliance notice

The Fair Work Ombudsman often takes very strict views on the terms of compliance notices. We have been involved in matters where an employer has repaid all outstanding entitlements, but did not do make a payment or provide calculations within the required time-frame. While the employer’s actions may not have been deliberate, even such a failure to comply with the compliance notice is a contravention of the Act and accordingly, it is often beneficial for the employer to admit liability if court proceedings are commenced.

In such a case the court would only have to determine what penalties to order against the employer (and its directors, etc). It is therefore important that the employer (or their legal representative) can emphasise factors such as: the employer has no history of contravening the Act, has admitted to the contraventions at an early opportunity (and therefore saved the Fair Work Ombudsman and the court the expense and time of a contested hearing), etc. Other relevant factors that the court might consider are if a director has expressed remorse regarding their earlier inaction. In such cases, the court may well be persuaded to apply a discount on the penalties due to the employer’s regret and co-operation and order penalties at the lower end of the scale.

 

Key takeaways

The financial, and potentially reputational, consequences that small businesses can face for failing to engage and comply with the Fair Work Ombudsman can be severe. The Fair Work Ombudsman is responsible for promoting compliance with Australian workplace laws and often assists employees with resolving workplace issues (such as where an employee alleges that there has been an underpayment of wages). The Fair Work Ombudsman has the authority to issue a compliance notice requiring rectification where they reasonably suspect that an employer has breached a workplace law.

Employers should keep accurate records, co-operate fully with any Fair Work Ombudsman investigation and ensure that they seek legal advice if they are unsure of their obligations.

 

 

Need further help?

If you need further help on any of the matters raised in this article please contact EI Legal.

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