Fair Work Ombudsman fines increase 20% as experts call for more education for SMEs

Experts say businesses need more education on how the Fair Work regime actually works if they are to be expected to avoid aggressive penalties, after data from the Fair Work Ombudsman showed a 20% rise in the level of fines issued by the workplace watchdog.

The new data shows there were 57 court-ordered fines issued last year totalling $2.2 million. This was a 20% increase from 2009 even though the number of prosecutions actually fell by 31.

“The Ombudsman is actually a helpful body if you approach them correctly and you have issues that you want to fix,” Douglas Workplace & Litigation Lawyers managing director Andrew Douglas says.

“The problem is that there is been such a significant change in the structure of Modern Awards that we have a number of employers struggling about how to comply, along with those that are being opportunistic and robbing the system.”

The FWO figures show the Ombudsman received 18,043 complaints in the year to April 30, 2010, with the accommodation and food services industry receiving the most at 15.95%. About 15% were in the retail industry, followed by 6.4% in transport, postal and warehousing, and 6.1% in construction.

The figures show that in 2009-10, there were 57 proceedings filed, resulting in penalties of $2.01 million. The year before, there were 78 proceedings totalling $1.6 million, while in 2008 there were 65 proceedings totalling $1.53 million.

The FWO also notes that following the introduction of the Fair Work legislation, “the Courts have been prepared to increase the quantum of their penalties”.

“We regularly receive penalties now in the high $100,000 and mid-$200,000 range. The highest-ever was $288,000 against a small Adelaide cleaning company which had underpaid two vulnerable workers less than $4,000.”

The FWO is also set to get more aggressive on these issues, saying that it will be targetting unlawful industrial action and discrimination in the workplace over the rest of the year.

The penalties being handed down by the Courts show they are taking a dim view of those who deliberately flout the law and refuse to cooperate with us on issues of non-compliance.

Douglas says as businesses continue to struggle following the financial crisis, more employers are willing to cut corners. But the FWO promises it will crack down on those companies willing to sacrifice compliance.

“The near-recession and the new Fair Work legislation have caused a little bit of greed, which is being caught out. Businesses are trying to bypass rules once they’re struggling, and particularly because the new compliance regime is much more difficult.”

“Three years ago, the amount of people who came to my business to see if they were paying correctly was negligible. Now they’ve been presented with a whole heap of awards, and continue to ask whether they are doing the right thing or not. These are big businesses – imagine how the smaller ones feel.”

Douglas says the issue is education. Businesses simply don’t know the appropriate rules they need to follow, and are struggling to comply.

“This is an incredibly complex and regressive regime, it’s hard to understand, and employers are going to make a lot of mistakes. If you go forward with them, the FWO is willing to help, but the leverage that exists to prosecute in this area is much, much higher.”

The FWO states its approach has been “fair and flexible”.

“We acknowledge that inadvertent and accidental breaches of workplace laws do and will occur. While we have compliance obligations to fulfil, we want to help employers to “get it right” so we can avoid going to Court.”

However, Council of Small Businesses of Australia chief executive Peter Strong says more education is needed before businesses can be expected to perform at their best.

“The real issue is that it would be unfair for someone to get in trouble for something they can’t get information on. If I was an employer and trying to do my best, I’d be disappointed if I was done for something if I just couldn’t understand it.”