INDUSTRIAL RELATIONS SUMMIT
Update from the Fair Work Ombudsman
Monday 5th March 2012
1. I begin by acknowledging and paying my respects to the traditional owners of the land
on which we meet; the Gadigal people of the Eora Nation.
2. The views I express today are my own, do not necessarily reflect Government policy, and
I take responsibility for any errors in the text.
What is our role?
3. If you know much about our office, you might say we have traditionally tilled the fertile
fields of sharks, shames and shams. For the reasons I will go through shortly, we work
actively to overcome problems in all sorts of workplaces, but probably not the sort you
will have a lot of direct contact with.
4. The wider purpose of the Fair Work Ombudsman is to assist employers and employees
alike to understand their respective workplace rights and obligations. Our role in all
cases is independent and neutral. We are independent of Government and we generally
do not act for either employers or employees. We’re not advocates and we’re not
representatives.
5. Like Fair Work Australia, our functions are spelled out in the Fair Work Act, and are
partly set out below;
“(1) The Fair Work Ombudsman has the following functions:
(a) to promote:
(i) harmonious, productive and cooperative workplace relations; and
(ii) compliance with this Act and fair work instruments; including by
providing education, assistance and advice to employees, employers,
P a g e |2
outworkers, outworker entities and organisations and producing best
practice guides to workplace relations or workplace practices;
(b) to monitor compliance with this Act and fair work instruments;
(c) to inquire into, and investigate, any act or practice that may be contrary to
this Act, a fair work instrument or a safety net contractual entitlement;
(d) to commence proceedings in a court, or to make applications to FWA, to
enforce this Act, fair work instruments and safety net contractual
entitlements;”1
6. In a practical sense though, what we do is provide advice; educate workplace
participants; work to improve compliance through a variety of interventions.
What is our focus & capability?
7. While our target audience is all workers and workplaces in the country, the focus of our
work is generally on those who are not members of unions or employer associations.
This is a snap-shot of the work we do in each of our functional areas;
Advice & assistance




Education
1

Help with issues of basic safety net entitlements or
award coverage and interpretation.
Guidance about basic elements of the Fair Work Act,
such as contractual status, leave entitlements;
agreement making; performance management or
termination. These actions are in the form of over
800,000 phone calls and several million website searches
each year.
Noting that once these discussions move beyond the
mechanics of obligations and into questions of “could”
or “should”, we have to disengage in order to maintain
neutrality.
The advice work is necessarily general – you get what
you pay for – and is high volume.
General information about the elements of the FW
Fair Work Act, s682(1), in part
Industrial Relations Summit
5 March 2012
P a g e |3


Compliance



system and the National Employment Standards, in the
form of fact sheets, best practice & “how-to” guides, and
distribution of short YouTube presentations.
Development of employment templates that encourage
SMEs to better document their employment stages.
Targeted industry campaigns that raise awareness about
compliance ahead of specific audits.
General deterrence through a structured litigation
program, coupled with strong & repeated media
presence.
More than 22,000 wages complaints investigated & over
6,000 audits completed annually.
These actions are across the range offences covered by
the Fair Work Act, including underpayments of wages;
general protections (including unlawful discrimination,
rights of entry & freedom of association); and unlawful
industrial action.
Compliance is more widespread and made easier to
achieve through deliberate coupling with the education
and media strategies.
8. The most significant influence on our current work is the impact of the Modern Award
transitional arrangements. This influence has led to a particular work design – general
advice and mass market education activities.
What can you expect from us and can we help you?
9. Our work design has led to feedback from different directions about what we do and
how we should do it. Sometimes we get that advice directly, and other times indirectly,
such as through formal submissions to the Fair Work Act Review which is presently
underway2. We welcome advice and spirited debate about how we should allocate our
resources, and use that advice and debate to refine our services, and I note that we are
2
The submissions may be accessed through
http://www.deewr.gov.au/WorkplaceRelations/Policies/FairWorkActReview/Pages/Submissions.aspx
Industrial Relations Summit
5 March 2012
P a g e |4
under continual public scrutiny and accountability. Aside from our Annual Report3, and
our thrice yearly attendance before the Senate Estimates hearings4, in 2010 the
Commonwealth Ombudsman reported favourably on our use of coercive powers5.
There is presently an audit being conducted by the ANAO into the efficacy of our
educative services and how well they relate to the functions required by legislation6, and
when it is completed later this year, the audit will be tabled in Parliament. We have also
opened ourselves to an academic study by the University of Melbourne that will
examine the effectiveness of our compliance model7.
10. If I take a look at the tenor of the advice to date, it is mixed and possibly even mutually
exclusive in some cases – more detailed advice, but greater timeliness; more attention
to vulnerable workers and less to unionised workplaces; greater rigour and more
transparency in our coercive investigations. While none of these are especially bad
things, and many I would actively aspire to, our work design is of course a product of
choices the Agency makes about the efficient allocation of resources, and that requires
us to take into account how we see the best way to deal with the demands for service
3
See http://www.fairwork.gov.au/about-us/publications/pages/annual-reports.aspx
4
We attend the Senate Education, Employment and Workplace Relations Legislation Committee, see
http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=eet_ctte/estimates/in
dex.htm
5
See Commonwealth Ombudsman, Report 09|2010 — Fair Work Ombudsman: exercise of coercive
information-gathering powers, June 2010,
http://www.ombudsman.gov.au/files/fair_work_omb_coercive_info_gathering.pdf
6
The audit will “examine the effectiveness of processes and systems established by the FWO to meet its
responsibilities. The audit [will] focus on selected responsibilities of the FWO, such as information provision and
education to support understanding of workplace rights and responsibilities.”
7
University of Melbourne, Melbourne Law School, Associate Professor John Howe and Associate Professor
Sean Cooney, New Initiatives in Enforcing Employment Standards: Assessing the Effectiveness of Federal
Government Compliance Strategies, 2009 - 2012
Industrial Relations Summit
5 March 2012
P a g e |5
which the community makes. As a regulator, we also need to pose the question: how
best can we positively influence the regulated market?
What services can be expected from us?
11. Drawing this together, I’d like to talk about the services you can expect from us.
12. We help employees and employers navigate the fair work system (and indeed, it is
navigable). It is certainly not the case that the system is too hard to sort out where an
employer stands. I have noted before that the system is challenging and especially as it
relates to the translational provisions for modern awards. But this does not mean it is
too hard to sort out where an employer stands; which modern award applies; or what is
the current pay rate for a particular employee. That is not to say that we will be
definitive about an individual’s rights or obligations within the course of every phone
call. Making a judgement about whether a particular workplace is covered by the
combination of a particular Modern Award, and a particular pre-modern award that
feeds into the new award would elude the skills of many very experienced practitioners
in the course of an 11 minute phone-call. The nature of our core website and phone
advisory services means that some such questions need to be escalated to a more
expert officer, and sometimes (but infrequently) we need to escalate the issue either to
an in-house legal officer, or for discussion with an industry or employer association or a
union which may have greater information than us about the formation of the
instrument and the meaning of certain words.
13. Around 800,000 people call us each year; and about 60% of them are employers. We
know that many of these are small businesses. It is far from the case there is no help for
small and medium enterprises or that we do not endeavour to work constructively with
them.
There has never been so much information in the public domain about
employment rights and obligations as there is now. For example, we have developed
template employment documentation and letters for use by small business on issues
Industrial Relations Summit
5 March 2012
P a g e |6
such as commencing employment, managing employment and ending employment.8
More than 900,000 have been downloaded so far, and the suite includes payslips and
record keeping templates and letters for the commencement of employment and
performance management.
14. I am enormously proud of these services, heartened by their take-up and the work we
have done to develop our role and deliver on some of the aspirations in the Act. For
example I think the work we have done around parental leave arrangements resonates
very well with the community – both employer and employee – and has led to a better
appreciation of people’s respective rights.
15. The nature of much of our educative work is interpretative, which in itself sometimes
invites disputes. Our approach to these situations is to involve ourselves in dialogue.
16. Contrast the task of determining award application with previous respondency tasks.
For example, in order to ascertain rights and obligations under previous systems, I recall
frequent conversations with employers about whether their production or employment
was within the scope of the dispute that led to the making of the award in the first
place; whether they recalled receiving the roping-in log of claims; or whether they were
members of a registered organisation of employers bound to a particular award; or
even. While this is not to say that small and medium enterprises or their employees do
not find it challenging to ascertain their obligations, it does say there needs to be a
sense of proportion associated with decision making about coverage. Simply put, some
issues require expert clarification and industry or employer associations are best placed
to do that, because they are expert, and often they are the ones which drafted the
relevant consent orders that created the award.
8
The employment templates may be accessed here:
http://www.fairwork.gov.au/resources/templates/pages/default.aspx and industry specific pages for
employers in the cleaning, clerical, fast food, hair & beauty, horticulture, hospitality, retail, security and vehicle
industries may be accessed here: http://www.fairwork.gov.au/industries/pages/default.aspx
Industrial Relations Summit
5 March 2012
P a g e |7
17. The opportunity for any workplace to tailor how the safety net applies to a particular
workplace is present in the Act, in the form of capacity to bargain over an enterprise
agreement or an Individual Flexibility Arrangement. The use of these avenues requires
thought and advice about whether and how this can be done in a particular case. I don’t
subscribe to the view that IFAs are not worth looking at, or that enterprise bargaining is
only available to the cashed up or unionised sectors. The opportunities for IFAs are
regulated by the Modern Award or collective agreement, and in the case of Modern
Awards for 5 subject matters;
a. arrangements for when work is performed, such as working hours
b. overtime rates
c. penalty rates
d. allowances, and
e. leave loading.
18. IFAs require the employer to assess whether the employee will be better off under the
arrangement, taking into account non-monetary issues as well as monetary factors.9 It
has been said that if the FWO doesn’t agree the Better Off Overall test has been met we
can come in and say the agreement is invalid and require back-pay. With respect, that is
not how the system works. Once signed, the agreement continues until one party
indicates gives written notice to the other they wish to withdraw,10 and the effect of a
purported agreement that does not meet one of the formation requirements is that it is
deemed to be operative, notwithstanding that it does not meet one of the legislated
requirements.11
9
See Fair Work Act, s144(4) in the case of an IFA made under a Modern Award; and s203(4) in the case of an
IFA made under an enterprise agreement
10
s144(4) and s203(6)
11
s145 and s204
Industrial Relations Summit
5 March 2012
P a g e |8
19. Can it be said that the FWO only goes after small business? Our regulatory footprint is
risk based and deliberately aimed at deterrence. It is also inextricably woven into a very
deliberate education strategy. Broadly, we do three types of regulatory activity –
a. receive and resolve complaints about breaches (usually underpayment matters);
b. conduct targeted compliance activities, such as audits; and
c. conduct litigation in Courts where the nature of the breach meets certain
criteria, including that it is in the public interest to pursue litigation.
20. Our inspectors cannot be in every pay packet nor every workplace, so by necessity, we
operate on a voluntary compliance model, which is much easier to achieve if there is a
broad industry acceptance of the over-arching policy and our role. The underpayment
matters come to us, and more often than not involve small and medium businesses.
Also more often than not, the complaint has some justification. That is, more often than
not there has been an underpayment. The targeted compliance activities are chosen by
us for three reasons – to correct known poor behaviour; to provide assurance to the
community; and to educate industry participants. The context within which these sit is a
wide acceptance that such targeted activities are valuable and, moreover, the sort of
work that we should be doing more of.
21. For the simple reason that our resources would not permit us to audit large companies
in the same way as small businesses, we have experimented with several different
approaches, which are proving quite successful. We are working with around 30 national
companies to provide assurances in both directions about the quality of their
compliance systems, which is under the broad umbrella of our National Employer
program.12 In addition, we have more recently concluded several Compliance Deeds
with large companies in order to establish voluntary compliance procedures for
underpayment claims that are raised. The Deeds publicly commit the companies to
12
For more details about the National Employer Program see: http://www.fairwork.gov.au/about-us/national-
employer-program/Pages/default.aspx
Industrial Relations Summit
5 March 2012
P a g e |9
conducting their own workplace audits and reporting to us about the results. In each
case, we have reserved the right to investigate or litigate any matter we think requires
such action.13
22. And in relation to our litigation practices, I reject the view the FWO will come down on a
duty-holder like a ton of bricks if they get something wrong. Litigation is used sparingly,
and the facts do not support the view that we make decisions capriciously, or without
taking into account explanations or the wider context of the duty-holders decision
making. In 6 years, we have initiated 241 litigations; had 198 finalised and been
awarded $7.6m in penalties by the Courts. Over the same time, we have completed
115,000 complaints and 29,000 audits, and recovered $149.6m for 91,000 workers. The
overwhelming majority of the money recoveries have been through voluntary
compliance measures.
What about the future?
23. We expect our work to continue to be dominated by the impact of modern awards over
the next couple of years. Our advisory services will continue to have a heavy demand
for basic wages advice, and our inspectors will continue to have a heavy demand for
underpayment complaints that are necessarily more difficult because of the need to
take into account several transitional instruments.
24. Even so, we plan to progressively move the balance of our work into educative and
preventative activities to the extent that we are able to do so. And we are prepared to
change the ways in which we work or respond to demands for service in order to be able
to do this. What that means is that you will see a greater emphasis on self-service for
the lowest levels of inquiry or complaint. You will also see a greater use of alternative
13
Relating to McDonalds Australia Ltd, Dominos Pizza Enterprises Ltd and Red Rooster Foods Pty Ltd. To
access the Deed, go to www.fairwork.gov.au and type “compliance deed” into the search box.
Industrial Relations Summit
5 March 2012
P a g e | 10
dispute resolution for our complaints, and you will also see a more extensive use of
compliance activities that require the duty-holder to show they are complying.
25. By making these changes, we can release capacity for preventative or assurance
activities, or educative activities that help businesses with some of the higher order
issues in the Fair Work Act (such as bargaining, dispute resolution or performance
management). In suggesting this, I do so with a caveat. While we recognise the demand
for assistance around these issues, and expect that we can and should move to meet the
demand to some extent, I don’t think we should back away from the primary role which
industry groups, employer organisations and unions have in meeting these demands.
Whereas Government is not well placed to advise on how to run your business, or how
to performance manage a problem employee, organisations and consultants are. That
point has been made forcefully to me by a number of people, and I have to agree with
them. However, in advocating that the primary role for provision of higher level
information is with such organisations, I would not want it to be heard as a view we
should not provide any services of this type. In fact we should, and organisations should
build on our basic services Much as I am very proud of our employment templates, the
reality is that the nuanced advice that is required for determining how to warn a poor
performing employee is not something we can give, and yet is the sort of advice a
business should have, whether from an organisation or lawyer, or from their skilled inhouse human resources adviser.
26. In closing I encourage your interest in working with the Fair Work Act, and encourage
your desire to learn.
27. Because of your professional standing and the size of the enterprise within which you
probably work, you are probably not likely to come into contact with the Fair Work
Ombudsman, although your employees may well do so if they have a query about their
entitlements. In most cases, the basic advice we give them will be probably be sufficient
to reassure them, or will give them the tools that will enable them to take up any
unresolved concerns directly with their manager, or you.
28. In some cases though, the issue will be sufficient for one of our staff members to make
contact with you to see what is going on.
Industrial Relations Summit
To paraphrase the apocryphal quote
5 March 2012
P a g e | 11
attributed to Sigmund Freud – that “sometimes a cigar is just a cigar” – a question from
us to you is often just that – a question without hidden meaning. So, tell us what you
think, and if there was an error that you have already corrected it or that you plan to do
so in the near future. That way, we can move on quickly to the matter that deserves our
attention more.
Fair Work Ombudsman – Contact Details
Nicholas WILSON, Fair Work Ombudsman
Location:
414 Latrobe Street, Melbourne
Telephone:
03 9954 2611
Email :
nicholas.wilson@fwo.gov.au
Infoline:
13 13 94
Web:
www.fairwork.gov.au
Mail:
GPO Box 9887 in each capital city
Industrial Relations Summit
5 March 2012