When ‘You’ll be better off overall’ turns out to be incorrect, the relaxed ‘over award’ approach a deadly system to have
The Fair Work Act doesn’t focus on the liability of leadership, directors, or owners of businesses. Perhaps it should, based on what the Honorable Justice Bromwich of the Federal Court of Australia had to say in Fair Work Ombudsman v Commonwealth Bank of Australia [2024] FCA 81 on 15 February 2024.
Former Commonwealth Prosecutor, Justice Robert Bromwich has sent the strongest of messages to leaders across Australia about the half-hearted approach leaders in a large portion of businesses across the country take towards workplace compliance.
On Thursday, Justice Bromwich handed down a rather blunt analysis of the causes of the underpayments amounting to:
AU$ 9,707,901 worth of underpayments for CBA employees; and
AU$ 6,357,358 worth of underpayments for CommSec employees
And his Honour’s assessment of penalties landed on:
AU$ 7,310,000 within 60 days for CBA; and
AU$ 3,030,000 within 60 days for CommSec.
This case involved close to 130 individual breaches of obligations under the employer’s very own enterprise agreement, and it has a bit of everything! This included compliance problems with the enterprise agreement, compliance problems with the individual flexibility arrangements, misrepresentation in relation to whether the ‘better off overall test had been met’ (BOOT Requirements) and ‘serious contraventions’ (which attract 10 times the penalties of a standard breach).
The Fish Rots at the Head
Some people say “if CBA, Westpac, NAB and even DEWR” get it wrong, does anyone have any hope of actually achieving a level of workplace compliance that will keep the FWO happy?
The issue in this case comes down to the attitude to workplace compliance and the need to take it seriously. Justice Bromwich is not suggesting every business needs to go out and conduct business-wide audits, but he is saying, if you see smoke and don’t check for fire, we’re going to sting you with big fines. If you see a few issues, there are possibly bigger issues. Lead from the top and the front, don’t treat workplace compliance as a ‘dark art’ left to those further down the ‘food-chain’, like HR to manage and resolve.
An investment in workplace compliance is an investment in your business, an investment in the reputation, an investment in the culture and an investment in avoiding the penalties that flow from deliberate, reckless, careless, or even inadvertent breaches of the Fair Work Act and all aspects of the employment relationship governed by those rules.
Speaking with businesses (and knowing) about what they are currently doing to manage the risks arising with their workplace compliance obligations. The landscape hasn’t changed much in the 15 years of the Fair Work Act, many businesses out still operate on the ‘wing and a prayer’ approach and the good ol’ ‘we pay over award’…. Bet you don’t.
Solution
We’ve already pointed out this is a leadership issue.
Put in place a compliance program to make sure you are meeting your workplace compliance obligations.
Some businesses go for the full audit and seek to ‘clean up’ the arrangements while others can afford to take simpler approaches like sample auditing.
Having an expert support your audit is vital. Check out RemCheck or contact Joe Murphy.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.