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
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
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
Questions? Give us a call.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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