The Fair Work Ombudsman (FWO) is on a rampage against employers underpaying staff. In FY2010/2011 the FWO commenced more than 50 underpayment prosecutions against employers, large and small. Expect even more this year.
Among the casualties was Hungry Jack's. Even though it took steps to rectify the underpayment by making back-payments to staff in excess of the shortfall, the FWO persisted with the prosecution in order to reinforce the duties of Hungry Jack's as a large corporate citizen to comply with its lawful obligations to staff. Hungry Jack's was slapped with a $100,500 penalty. Now that's a whopper fine.
In another prosecution, a 7-Eleven franchisee was fined $150,000 for underpaying international students by paying flat rates for all hours worked and requiring them to work unpaid "trial periods". The small size of the employer, as a franchisee, was taken into account. However, in this case, size didn't matter as the franchisee had the benefit of regular training and updates from the global franchisor's Head Office to assist with understanding legal obligations. That assistance was ignored.
The buck doesn't just stop with the employer. Directors can also find themselves facing a prosecution and personal liability. For example, in a recent prosecution, directors of a company were personally fined $136,000 for underpaying 47 employees, leaving the employees $170,599 out of pocket.
We know that navigating modern awards and applicable legislation can be tricky and time consuming. But ignorance is no excuse and admitting liability won't get an employer off the hook. Employers must be proactive and ensure that all staff receive their minimum entitlements.
Our top three tips for staving off an FWO prosecution are:
- identify the modern awards and classifications which apply to staff in your workplace;
- ensure that staff receive adequate compensation for actual hours worked, paying particular attention to ordinary hours of work, overtime and penalty rates, and shift allowances;
- comply with record keeping obligations so you can demonstrate compliance with obligations if you are unlucky enough to be audited.
Questions? Give us a call.
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