If you’re too busy to read this article, you’re probably one of the at-risk employers who most need to read it!
If you’re a business owner or manager, you’re busy, you have a million things to do, so we’ll keep this short.
The Fair Work Ombudsman (FWO) did a national audit of over 1200 businesses in a range of industries. The FWO looked specifically at what they call the ‘basics’ of workplace compliance: paying your staff correctly, giving proper payslips, and keeping adequate employment records.
The results came out recently in the Workplace Basics Campaign Report.
The FWO found that nearly half of the businesses audited (48%) failed to get basic compliance right. Nearly three-quarters of these were underpaying staff, while nearly a third failed to keep proper records and payslips.
The worst offenders were in Hospitality (Accommodation, Fast Food, Restaurants and Cafes), where 61% of businesses were non-compliant, and Retail, Administration and Support Services (47% non-compliance).
Nearly 300 of these businesses were forced to pay over $1.3 million to employees, and all the businesses that failed were hit with a combination of contravention letters, formal cautions, infringement notices (i.e. fines) and compliance notices.
They thought they were doing things correctly
The sobering part is that almost all of these businesses thought they were compliant.
When they failed the audit, and the reasons were pointed out to them, nearly three-quarters of these employers claimed they were unaware of the applicable workplace relations obligation.
In other words, “I didn’t know what the rules were”.
While pleading ignorance of applicable laws may seem like a convenient excuse, for most businesses it’s a reality. Many employers simply don’t know what the rules are – if they did, they wouldn’t have let the problem occur in the first place!
Australia’s complicated workplace laws make 100% compliance difficult for many small and medium-sized businesses. Smaller businesses often have no internal HR department or expert whose sole job is to know every workplace law and keep up with changes. And having an HR department still doesn’t guarantee compliance. Indeed, many of our larger clients, with entire HR departments, became our clients because their internal HR people simply couldn’t keep up with every Award, regulation and obligation. If companies like Woolworths, with entire departments dedicated to payroll and HR, can still make mistakes that result in them underpaying their staff, then what hope has a small business?
To the FWO, however, not knowing the rules is not a valid excuse for failing in your basic obligations as an employer. As the Workplace Basics Campaign Report formally puts it: “A lack of awareness of obligations under the Fair Work Act 2009 is not a valid reason for non-compliance in the workplace.”
Why does the report matter?
The report is a wakeup call to employers about how easy it is to get the basics of compliance wrong. It’s essentially saying that you could be non-compliant right now, and not realise it, given that almost all the businesses that failed thought they were doing the right thing and assumed they were compliant.
How to ensure you have the basics right
- Look at getting an external professional to do basic compliance audit of your business (before the FWO does it for you). A good audit will uncover mistakes and vulnerabilities in the way you manage and pay your staff, and tell you how to fix them.
- Be aware of the common compliance vulnerabilities in your industry, especially if you’re in an FWO-targeted industry that has a history of non-compliance. For example, you might be in an industry that employs a lot of casuals, or staff under Awards, or shift workers, or has opening hours that cross over into weekends and evenings, leaving you vulnerable to issues with Awards and penalty rates (besides the usual payslip and record-keeping obligations).
- Stay informed. Sign up to HR newsletters (we have one), FWO alerts and media releases, and industry association publications; make the time to read these, as well as the FWO site and its free resources; make an effort to understand the information and how the regulations apply to your unique business. An HR telephone advisory service can save you hours of time and effort here – you can just pick up the phone whenever you need to know something.
- Prioritise your workplace compliance. Not always easy to do when you’re busy trying to run your business and look after your customers, but inescapable (and necessary) in the current environment.
- Learn your lawful obligations to your employees. If you run a small or medium-sized business and don’t have a dedicated HR manager to help you with this, think about creating an HR function through outsourcing. It’s more cost-effective than hiring an internal HR specialist, and gives you access to vastly more support and expertise than one person alone could provide, no matter how well-trained they are.
With the FWO continually targeting businesses, and half of them failing a basic compliance audit, you need to be proactive to ensure your business isn’t one of them.
If finding time to manage your compliance is difficult, or you’re unsure whether you’ve got the basics right and would pass an audit, there ARE cost-effective solutions available to you. At HR Assured we offer industry-leading audits that will determine if you’re a non-compliant business, where you’re non-compliant if you are, and help you fix any issues. We’ll even take care of your compliance afterwards, with full HR support and an award-winning Telephone Advisory Service. Get in touch with us if you’d like to find out how we can help.