The Fair Work Ombudsman (“FWO”) has broad compliance powers, including to investigate underpayment complaints, issue compliance/infringement notices and enter into enforceable undertakings as alternatives to litigation.
In this Insight we will provide a snapshot of the FWO’s compliance and enforcement activities from the last financial year. These activities highlight areas of focus for the FWO, the implications of non-compliance and how employers can avoid finding themselves on the receiving end.
Enforceable Undertakings
In the 2024 – 2025 financial year, the FWO accepted eight enforceable undertakings (“EUs”) – four from universities and the remaining from the disability support services, large corporates and agriculture sectors. This is a notable decrease from the 14 EUs accepted in 2023 – 2024 and similarly 14 in 2022 – 2023.
The highest of the underpayments subject to an EU was $72 million owed by the University of Melbourne, which admitted to underpaying a range of entitlements to 25,000 employees under its enterprise agreements. The underpayments largely stemmed from academics being paid according to ”benchmarks” as opposed to actual hours worked.
Most recently, Griffith University self-reported and will complete more than $8.34 million in back-payments relating to 5,457 employees. The underpayments arose due to inadequate or non-existent payroll and data review processes, lack of automation and deficiencies in payroll systems. FWO Anna Booth stated:
“The matter serves as a warning of the significant long-running problems that can result from an employer failing to have appropriate checks and balances to ensure workplace compliance”.
The University of Sydney has also committed to back payments of more than $23 million to 14,000 employees, and La Trobe University will complete more than $10.77 in payments to over 6,700 employees.
Aside from rectifying the underpayments, the universities have committed under their respective EUs to measures such as:
• reviewing and improving payroll systems and record-keeping practices;
• undertaking independent audits to check it is meeting all employee entitlements;
• training relevant staff regarding Fair Work obligations; and
• prioritising workplace relations compliance into its corporate governance framework.
These measures (and more) align closely with those noted in the FWO’s new Payroll Remediation Program Guide released in May this year.
Litigation
There were 34 litigation outcomes last financial year. 21 of these related to non-compliance with a FWO compliance notice.
We also saw the first and third highest ever total penalties secured by the FWO in relation to underpayment proceedings.
The Federal Court of Australia imposed $15.3 million in penalties against Sushi Bay Group after finding it had deliberately and systematically underpaid 163 workers a total of $653,129 between 2016 and 2020. Most affected workers were Korean nationals on student, working holiday, or skilled worker visas.
A penalty order of $5.1 million was imposed upon Blue Sky Kids Land – $803,000 of that amount was ordered against two directors in their personal capacities, and a further $44,100 penalty was ordered against an associated company. The contraventions related to underpaying four Chinese migrant workers a total of $131,920, locking a store ahead of a Fair Work Inspector’s visit and breaches of record-keeping and pay slip obligations.
In both cases, Fair Work Inspectors had interactions with and put the employers on notice to correct non-compliance issues, yet the contravening conduct continued.
Criminal Prosecution
While new wage theft laws have now been in force for over six months, the FWO has not yet referred any matters for criminal prosecution.
ICYMI: see our three-part Wage Theft Series below:
• Part 1: Why Are the New Wage Theft Laws So Important?
• Part 2: Your Corporate Culture and Wage Theft
• Part 3: How Can You Prepare for the New Wage Theft Laws?
We eagerly await the FWO’s 2024 – 2025 Annual Report, to be released later this year, which will further detail the FWO’s activities last financial year and its priority areas for 2025 – 2026.
Cowell Clarke is pleased to offer its RemCheck service to organisations that wish to obtain peace of mind by confirming their payroll compliance. Our Employment & Workplace Relations Team can also provide advice should you have any queries or concerns. Contact Emily Gray, Senior Associate, or Jemma Andretzke, Lawyer, for further information.