Recent Precedent 2010 - Issue 6

Posted on 25 July 2010

Employers Beware: Avoid Prosecution by the Fair Work Ombudsman

“We will not hesitate to take Court Action”, (Fair Work Ombudsman).

Five reasons to review and/or update your Employment Practices:

1. Fines from Fair Work Ombudsman (“FWO”) prosecutions for breaches of the Fair Work Act have increased by 20% in the last year. The dollar amount of fines has also been increasing with many in excess of $100,000 and $200,000. In one recent case a Small-Medium Enterprise (SME) was fined $288,000. This was not even a large business, and Fair Work Australia has indicated that it sees no reason to reduce the size of fines because of the size of the business.

2. “Back pay” of tens of thousands of dollars often has to be paid out in addition to the significant fines. One SME was recently ordered to make payments in excess of $90,000 in back pay to employees.

3. Personal Liability applies. It gets worse! In another recent FWO prosecution the Director of an SME was personally ordered to pay $110,000 in fines out of his own pocket.

4. Irreparable Damage to your name and reputation is highly likely to be caused by a prosecution by the FWO. The FWO have a ‘name and shame’ style media policy through which they systematically release what can be highly prejudicial public statements relating to specific prosecutions as well as passing the stories on to major news outlets. Once the story has been released it cannot be retracted and there is no ‘right of reply’ or opportunity to have your say.

5. Further & Ongoing Scrutiny of FWO Investigators is a common consequence of a successful investigation/prosecution as you are ‘on their radar’. We have experienced first hand clients being routinely ‘investigated’ after an innocuous initial complaint about a minor matter. These ‘investigations’ can pick at any discrepancies that they can find no matter how minor or insignificant.

What to Do

The powers of the FWO to prosecute you personally, as well as your company, are broad. To avoid the embarrassment and burden of fines and back payments you haven’t budgeted for arrange a Free Business Health Check with us to ensure you’re in line with the Fair Work Act. Contact us on 300 306 335.