Fair Work Ombudsman announces audits of 250 businesses in Sydney and Melbourne to fight worker exploitation

SmartCompany, June 23, 2017

The Fair Work Ombudsman has initiated a series of random audits of 250 businesses across Melbourne and Sydney regions, and business leaders say the process is “just another thing to worry about” for time-poor SMEs.

On Wednesday the Fair Work Ombudsman (FWO) announced a joint campaign with the Australian Securities and Investment Commission (ASIC)  to visit 50 businesses in the Melbourne CBD, checking up on records and time sheets to ensure employers are on top of their compliance.

ASIC officials are also involved in the Melbourne audits, hoping to “raise awareness” around the role of the corporate regulator for small businesses. The joint effort is also aimed at reducing the time needed for SMEs to comply with the audit, noting typically both bodies would visit the business at different times.

Following this, the FWO today revealed it would look into 200 business in the south west Sydney region, specifically targeting the manufacturing, retail, and construction sector in a region the FWO said was “particularly vulnerable to exploitation”.

“We are conscious that workers in this region may face barriers to understanding workplace laws and to taking action to address workplace issues. This potentially makes them more susceptible to accepting sub-standard working conditions,” Ombudsman Natalie James said in a statement.

“Through our proactive compliance and education campaigns, we are seeking to ensure that employers fully understand Australian workplace laws and are well equipped to build a culture of compliance in their workplaces.”

Despite the ongoing work by the FWO towards a simplification of processes for SMEs, Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell says random audits to ensure compliance are “yet another thing for businesses to worry about”.

“While businesses who are trying to screw other businesses or employees deserve what they get, it’s important with random audits that a measured approach is taken towards businesses who are reasonably attempting to comply with the FWO”, Carnell told SmartCompany.

The FWO has also recently released a follow-up report on 891 businesses audited by the regulator who were found to be non-compliant, reporting that audits from the FWO have a positive effect on compliance.

Out of that number, 83% of businesses who were found to be non-compliant are now paying workers correctly, and a further 81% were now correctly complying with recordkeeping and payslip laws. Overall, 69% of previously non-compliant businesses were found to be fully compliant.

“It is clear that after their initial interactions with my agency, most of these businesses have taken our advice on board and put in place systems and processes to ensure they are compliant into the future,” James said.

“Many of these businesses are small businesses that often do not have the benefit of dedicated human resources or payroll teams, meaning that the advice and guidance they receive from my agency is vital.

“The positive results of this campaign show that non-compliant businesses are often genuinely trying to do the right thing, but may lack an understanding or awareness of their obligations.

SMEs want to do the right thing

Carnell says while the “vast majority” of businesses are wanting to do the right thing, the complexity of the Fair Work Act and awards system results in “lots of bureaucracy” in the space, and is calling for simplification and safe-harbour provisions for SMEs.

“Some of the non-compliance issues for those businesses is because they didn’t include their ABN on a payslip. I accept that’s the law and you have to have it, but it’s unnecessarily complex,” she says.

“Businesses are making an effort to comply, but the smaller the business the harder that is, and the Fair Work Act applies to all businesses, whether it’s BHP or the cafe on the corner.”

Carnell is pushing for a simpler approach to compliance for SMEs, and a set of safe-harbour provisions businesses can comply with to ensure they’re protected from complex legislation.

“There should be a clear set of things SMEs must comply with, and if they do all these things they’ll be fine, and they won’t have to face the huge price of legislation and all the other sorts of issues,” she says.

“I know the FWO is very positive towards simplification and is attempting to give SMEs the tools to be able to comply, but it’s important to put yourself in the shoes of a small business owner, working 60-70 hour weeks and then doing all their wages and BAS after hours.”

“They’re trying to keep their business afloat, and the growing complexity of the Fair Work and Tax Acts aren’t making it any easier.”