The FWO has been very proactive in enforcing employment compliance, with new stats showing even larger increases in compliance activities compared to previous years. Here are WageSafe’s 5 takeaways from the FWO’s 2020-21 report, which was released back in September 2021.
- Be prepared
The FWO is only getting more proactive in searching for non-compliant businesses. Businesses often think they are compliant or don’t think about it, either because they :
- Haven’t been audited before,
- Have been taking the same approach for years and never had any issues,
- Believe they are honest in their intentions and want to pay their staff correctly,
- Not worried about the FWO because they don’t think they’ll be audited.
This can lead to complacency and result in payroll systems and processes that go unchecked for long periods, which can perhaps mean small but regular mistakes, which eventually accrue into large underpayments.
It is therefore crucial that you aren’t being complacent in thinking that it won’t matter if you’re compliant or not because the chances the FWO will audit your business are quite low or you won’t have any problems.
- Large corporates are now a top target for the FWO
Big businesses from all industries are continuously being found to be underpaying their staff by massive amounts. Recently, notable businesses where this has occurred include the retail, not-for-profit, banking, and university sectors. Often in these situations, the FWO uses enforceable undertakings to achieve their desired outcomes.
In the 2020-21 financial year, the FWO issued 19 enforceable undertakings, which recovered $81 million in unpaid wages. Additionally, the FWO has been using these enforceable undertakings to ensure the employers are responsible for calculating underpayments and ensuring there are compliance measures in place to prevent future employment non-compliance.
- The FWO has greatly increased its use of enforcement tools
The FWO has continued in taking a heavy-handed approach, with a 62% increase in the amount of enforcement tools used and in the last financial year, where a record $148 million in unpaid wages was recovered. The FWO’s main tools are the use of infringement and compliance notices, making up 2,538 of the measures used in the 2,633 cases.
- Compliance notices, the FWO’s most used enforcement tool, but going to Court isn’t out of the question
Compliance notices are issued by a Fair Work Inspector, which require an employer to fix a breach under Australian employment laws. A compliance notice will include:
- Details of the breach,
- What the employer needs to do to fix the issue,
- When they must fix it by,
- How the notice can be reviewed in court,
- What happens if the notice isn’t complied with.
In the last financial year, the FWO issues 2025 compliance notices, a big increase from 952 in the prior year. Furthermore, the amount recovered by each compliance notice increased by 717%. The average amount recovered last financial year was $8,148, increasing from $997 from the previous period.
If these notices aren’t complied with, then the employer can be taken to court by the FWO where they can be fined. On the other hand, if the notice is complied with, the FWO is unable to bring legal action against the employer.
- The FWO’s targets remain largely the same
The FWO has also acknowledged that there are industries and areas more prone to payroll non-compliance and underpayments. Specifically, the FWO has targeted the Fast Food, Restaurant, and Cafes (FRAC) sector as the least compliant sector in terms of payroll compliance. Here are the FWO’s other priorities for this financial year:
- Franchise agreements,
- Sham contracting,
- Contract cleaning,
- Assisting workplaces through COVID-19.
Take a look at our take on the FWO’s 2021-22 Focus Areas here. If your business does fall into any of these categories, it is paramount that you’re managing your payroll compliance appropriately.
Don’t wait till you (or worse, the FWO) find a payroll compliance issue in your business. Get on the front foot and make sure you’ve got an extra layer of payroll assurance to protect your business from underpayments and the damages that come along with it.