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I’ve rectified an underpayment to my employees. Do I need to tell the FWO?

By Charles Power on November 6th, 2019
  1. Industrial Instruments
  2. Fair Work Act

Each week a different employer is self-disclosing underpayments of wages to the Fair Work Ombudsman (FWO).

In the face of recent adverse media publicity about award breaches and so-called ‘wage theft’, non-complying employers perceive there is a positive in letting the regulator know of the problem before an affected employee does.

An employee considering self-disclosure needs to understand that the FWO only has a policing role where the underpayment involves a contravention of the Fair Work Act 2009 (Cth) (FW Act).

The FWO cannot take legal action against an employer for breach of employment contract or non-payment of employee entitlements where this did not entail a contravention of a statutory provision.

Non-payment of superannuation contributions is primarily the ATO’s function. The FWO only has jurisdiction over this area if this involves a breach of an award or enterprise agreement. 

Except in very limited circumstances, the FWO has no responsibility for enforcing long service leave entitlements. These are usually the purview of the State Department of Labour or equivalent.

Even where there is a contravention of the FW Act, the FW Act does not create an obligation on an employer to disclose to the FWO an FW Act contravention in which it is involved.

It is a legitimate option of a defaulting employer to focus its efforts on remediating or making good the contravention in respect of existing and past employees.

However, the fact that an employer has voluntarily rectified a contravention will not protect it from being the subject of legal proceedings commenced by the FWO to obtain a penalty.

The FWO makes it clear that it will do this if it considers it needs to achieve specific or general deterrence.

Specific deterrence might be considered necessary because the employer has a particular history of not complying with the FW Act, or its general attitude towards meeting its FW Act obligations is poor (for example, because of media comment).

General deterrence might be appropriate if the employer is in an industry that employs a significant proportion of workers in cohorts perceived to be relatively vulnerable, such as young people or migrants.

Recently, when a major retailer self-disclosed significant underpayments of its workers, the FWO issued a media release stating that it would be holding the retailer to account.

The FWO said in its media statement:

Each week, another large company is publicly admitting that they failed to ensure staff are receiving their lawful entitlements. This simply is not good enough. Companies will be held accountable for breaching workplace laws. Companies and their Boards are on notice that we will consider the full range of enforcement options available under the Fair Work Act, including litigation where appropriate.

There are occasions, however, where the FWO’s zeal to publicly punish an underpaying employer can attract the ire of the Court.

In FWO v The Meatball and Wine Bar Pty Ltd (2018) for example, the Court observed that the adverse publicity of the legal proceedings on the underpaying employer needed to be taken into account in assessing the penalty to be awarded.

The judge stated that, in this case, general deterrence did not have a substantial role in circumstances where there had been significant negative publicity, both against the business and the proprietor personally.

Learn more in the Employment Law Practical Handbook

In the Employment Law Practical Handbook on Portner Digital, there is a whole chapter on the Fair Work Ombudsman which details the powers they have and when and how they can investigate your business.

Find out more.

 





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