Employment obligations – the basics

Understanding your employment obligations ensures your business stays within the law and you avoid costly Fair Work Ombudsman penalties.

I’ve watched with interest the increased activity from the Fair Work Ombudsman (FWO) in random audits of businesses in Brisbane and on the Gold Coast and in particular, investigating wages underpayments and records-keeping obligations.

One example? An April 2022 case where the FWO secured a $45,000 penalty in court against a company that formerly operated a Gold Coast childcare centre and a court order for the company to back-pay workers more than $250,000.

When an audit by FWO is undertaken (or when an employee files an unpaid wages claim with FWO), the employer will be required to produce time and wage records. Not being able to do so may result in reverse onus of proof, where an employer is essentially presumed guilty until proven innocent. Because of this, failing to meet obligations for record keeping for small businesses can be costly.

Depending on the case, employers may be issued with an infringement notice and be required to pay a fine. However, in more serious cases, the FWO inspector may recommend the case is taken to court. In this case, reverse onus of proof may apply.

The maximum fines payable by an infringement notice are $1,260 per offence for individuals, and $6,300 per offence for a corporation. In court, this increases to $12,600 per individual offence and $63,000 per corporation offence. In serious cases where underpayment occurred knowingly, employers may be required to pay up to $126,000 per offence for individual employees. This amount increases to $630,000 per offence for corporations.

So how can employers protect themselves? Start with getting three areas right:

1. Correct information on payslips: there are a minimum of 10 details of an employee’s pay for each pay period that must be included. If you use an external payroll provider, make sure they confirm in writing to you that their payslips are FWO compliant.

2. Award-covered employees: you should have a Contract of Employment showing the applicable Award and Award level (classification) for each worker and you review the Award classification when an employee takes on new duties (or at least annually)

3. Salaried employees: if salaried employees are covered by an Award (and only a very few professions are not), make sure are you compliant with the March 2020 Fair Work obligations demonstrating these workers are “better off overall” under the annualised arrangement than they would be if in receipt of the hourly rate, overtime, penalties and allowances under the applicable Award.  This includes a calculations table confirming better off overall status, you holding records of commencement, breaks and finishing times for each salaried worker each day plus are undertaking at least an annual reconciliation of salaried hours against the entitlements offered in the Award.

The above can be a little daunting if you don’t know where to start. What FWO would typically take into consideration is that an employer has the intent and a demonstrated plan to ensure their employment documentation is in place, correct for the employment type of their workers and reviewed on a regular basis to maintain compliance with their lawful obligations.

Like to know more about getting your employment obligations sorted? Give Bare Bones Consulting a call or shoot us an email through our “Contact Us” page. While you’re in full HR mode, take a look at the Bare Bones Consulting Facebook page…a little dodgy humour plus short and simple tips to make your professional life a little easier…and who doesn’t need that?