Awards for confusion

It’s important to put a positive spin on things, and that’s exactly what the Fair Work Ombudsman has done in its report on its audit of more than 2,000 retailers, which found a staggering 26% were not complying with Labor’s modern award regime.

“More than 750 workers at retail stores throughout Australia have received an unexpected bonus – more than half a million dollars in back-pay.”

An unexpected bonus, eh? Sounds great!

Well, no.

The fact that more than a quarter of retailers are failing to comply with their obligations under the modern awards suggests this is more than a few rogue employers doing the wrong thing.

A non-compliance rate of that size suggests that the complexities of the modern awards and their transitional arrangements are simply baffling many retailers, a fact Ombudsman Nicholas Wilson appeared to acknowledge in the media release.

“Many employers underpay as the result of a lack of information or they make mistakes interpreting the information they have.”

Okay, so employers need to be better informed and work harder to understand how the awards apply to their workers. But where do they go to get this information?

The Fair Work Ombudsman is one option and all reports suggest that it has done a lot of good work educating employers about their obligations.

But issues can naturally arise when the organisation that is supposed to give advice to employers about awards is also the organisation charged with prosecuting employers that stuff up.

The best example of this concerned a Melbourne manufacturer called Pop Art Australia, which claimed last year it had been threatened with a back-pay bill of up to $700,000 after it incorrectly classified some of its workers.

But the owner of the company claimed he had received eight separate pieces of advice from government officials – including the Fair Work Ombudsman – that he was meeting award rules.

The Ombudsman eventually withdrew its threat of legal action after an investigation, but the case was seized upon by critics of the Fair Work regime.

“The Fair Work system, which was supposed to be simpler, is so complex that even Fair Work can’t give accurate advice to employers on what award their employees should be on,” Opposition small business spokesperson Bruce Billson said after the Fair Work review was announced late last year.

That’s over the top. While the Ombudsman makes it clear on its website that its advice is “general in nature” and “not legal advice” it remains the only place where employers can get free information about their obligations.

But the Ombudsman’s report suggests there is room for more education and more advice services, particularly in the retail sector.

According to Russell Zimmerman, executive director of the Australian Retailers Association, the level of confusion among retailers about the modern awards system is huge, with more than half of the calls to the ARA concerning HR and IR issues.

Zimmerman wants government funding to step up its education efforts. While that would of course help bring in more income for his lobby group, it would also help meet a real education problem that the Ombudsman and the industry needs to tackle.