Australian Command & Staff College
The Fair Work Ombudsman’s view to managing a workforce
Nicholas Wilson 1
with Lynda McAlary-Smith and Adam Rodgers 2
16 November 2012
Preamble
1. I begin by acknowledging the traditional owners of the land on which we meet, the
Ngunnawal people, and pay my respects to Elders both past and present.
2. I would like to thank the Australian Command & Staff College for the invitation to
speak here today.
3. I record that the views I express today are my own and do not necessarily reflect
Government policy, and I take responsibility for any errors in the text.
4. I’ve been asked here today to share my views on current issues in Australian
workplaces and alternative views to managing the workforce. In doing so, I will give
you some context about the Fair Work system, what it does, and how its several
elements fit together. I also plan to discuss a range of issues that my agency, the Fair
Work Ombudsman, deals with on a day to day basis
5. I will also examine some workplace and management issues that my agency
endeavours to observe as well as seek to raise awareness about. This includes topics
such as leadership, discrimination, diversity as well as procurement and the fair work
ethics involved in supply chains.
1
Fair Work Ombudsman
2
Executive Director, Education and National Employers and Director, Education
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The Fair Work system, and the role of the Fair Work Ombudsman
6. The Fair Work Ombudsman was established on 1 July 2009 under the Fair Work Act.
The Agency is one of two created by the Fair Work Act, the other of which is the
national workplace relations tribunal, Fair Work Australia, whose head is The
Honourable Justice Iain Ross AO. A later creation (formed by separate legislation) is
Fair Work Building and Construction, headed by Leigh Johns, which has responsibility
for workplace relations regulations for the major construction industry.
7. At its core, the role of the Fair Work Ombudsman is to promote harmonious,
productive and cooperative workplace relations and ensure compliance with
Commonwealth workplace laws3.
8. Our vision is to create fairer Australian workplaces. Working toward this vision, we
interact with more than 3 million people a year – we advise; we assist; we educate;
and we ensure compliance.
9. The Fair Work Act introduced significant legislative changes that impacted on the
majority of Australian workplaces. These changes dealt with a number of important
areas, such as, the introduction of new good faith requirements for workplace
bargaining and ten National Employment Standards, which provide for a minimum
safety net for employees.4
10. My Agency’s mandate is to build public knowledge of the Australian workplace
relations safety net and enable employers and employees to empower themselves to
resolve their own disputes. We recognise that the greatest public good is for
Australians to be aware of their rights and obligations and to be given the confidence
that their rights and obligations can be accessed.
3
Fair Work Act 2009 – Section 682 (1)
4
Sections 124-125 of the Fair Work Act
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11. In raising awareness of these rights and obligations, one of the more traditional
methods of engagement with employers has been that of our targeted campaigns.
Our targeted campaigns team analyses our own internal data and intelligence from
the broader community to determine what industry, profession or location should
be the focus of our targeted educative and compliance campaigns. These campaigns
are either national, state/territory based or regional.
12. The overarching philosophy of these campaigns is to have a positive impact on the
long-term behaviour of employers by combining education with compliance
activities. These campaigns are an opportunity to drive cultural change within
workplaces by equipping them with the right information and tools to create
compliant and respectful workplaces.
13. As positive as our message is during these campaigns, it is also an opportunity to
detect where employers are getting it wrong; some intentional, most unintentional,
and help them to try and fix any problems. In the 2011-2012 financial year, we
conducted 4 national campaigns and 22 state/territory campaigns5. This resulted in
over 6,500 individual time and wage audits being conducted with over $6 million in
underpaid wages recovered for almost 4,000 employees. I am pleased to say that the
overwhelming majority of issues we identified were resolved voluntarily.
14. ln addition to our interactions with individual workplaces through our targeted
campaigns, our primary points of contact for employers and workers are through our
website fairwork.gov.au and the Fair Work Infoline. We have direct communication
with customers through both of these channels. In the last financial year, we:
a. answered almost 700,000 phone calls
b. responded nearly 40,000 email enquiries
c. conducted over 48,000 live chats via fairwork.gov.au.
5
National campaigns: Retail, Security, Clerical and Vehicle.
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15. We have a wealth of information available on fairwork.gov.au, and we’re always
looking at what else can be done. Moving forward, our aim is to increasingly
empower workers and employers with the skills to be able to resolve problems or
concerns at their own workplace level. This sees the evolution of our educative role:
we’re moving beyond educating workplace participants on specific rights and
entitlements; we are now moving towards skilling both employers and employees to
effectively resolve workplace disputes, lessening the need for our intervention.
Managing workplace issues
16. The Fair Work Ombudsman encourages all employers and employees to attempt to
resolve workplace relations matters in house. Although your workplace may not be
governed by the same legislation that we enforce, this is principle remains the same.
17. Research undertaken by the Department of Industry, Innovation, Science, Research
and Tertiary Education has shown self-resolution mechanisms provide benefits to
employers, employees and the economy as they:
a. Improve employee engagement
b. Are more cost effective and less formal than investigation, arbitration and
especially litigation, and they
c. Help maintain and improve the employment relationship6.
18. There are additional steps an employer can take to minimise and resolve disputes in
the workplace, as well as enabling disputes to be dealt with when they do arrive.
These include:
a. Encouraging the open and professional expression of opinions by staff and
management
6
Department of Innovation, Industry, Science & Research ‘Resolution of small business disputes options
paper’, 2011
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b. Recognising the importance of how people feel about issues
c. Listening to what people have to say
d. Focusing on interests rather than positions and personalities
e. Making sure you have clear discipline, grievance and dispute handling
procedures in place.7
19. I know that some of these recommendations may be easier said than done, but
managers will find that these measures will work towards limiting the need for third
party involvement in workplace disputes.
20. For our Agency it becomes an issue of significant concern when an employer or
employer representative is being wilfully negligent of their responsibilities and
demonstrates no intention of doing the right thing. As I will discuss later, knowing
your responsibilities and boundaries is an important part of effective people
management.
21. I believe this applies to any workplace; as well as yours. I understand that the
Defence Force has its own internal processes to deal with disputes as well as
external bodies they answer to when issues cannot, or should not, be resolved in
house.
22. In house dispute resolution is an issue I believe deserves far greater attention. The
Fair Work Ombudsman is working toward educating workplace participants to equip
them with the knowledge and confidence to be able to resolve issues without
external involvement.
Workplace compliance trends
23. As I’ve said, my job is to make sure that employers are complying with the Fair Work
Act so that workers are receiving their safety net rights and entitlements. The work
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ACAS – Disputes and conflict in the workplace
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that we do in this capacity gives us great insight into trends of non-compliance in the
broader workforce.
24. Based on complaints received in the 2011-2012 financial year, we know that the
accommodation and food services industry and the retail industry are among the
more problematic industries operating in Australia.
25. The vast majority of the complaints we receive from these industries relate to the
underpayment of employee wages and conditions. This is sometimes due to wilful
negligence on the employer’s part, though it is more often a result of oversight by an
employer or manager and is able to be resolved through voluntary compliance.
26. Voluntary compliance means that the person who has breached the legislation
remedies the issue willingly at the request at one of our Fair Work Inspectors. I am
pleased to say that we achieve this outcome in the majority of complaints received.
27. Voluntary compliance presents our inspectors with the opportunity to educate these
employers to prevent this type of thing from happening again. Of course the ideal
outcome for us would be employers and managers being aware of their obligations
from the outset. I know this is not an easy task, but I believe it is part of being a good
leader and a strong manager. Knowing your responsibilities and obligations is
important in any role. Being naïve or ignorant to something that is required of you
will never work in your favour. This is something else I hope you take away from
today: make it your purpose to know what’s expected of you from every possible
angle.
28. I know, for example, that for private sector employers, there is a need to contend
with the Fair Work Act, taxation legislation, workplace health and safety and more.
29. Of course, the Defence Force faces similar and indeed higher levels of regulation.
There are always those policies and procedures that you need to adhere to, to
ensure your business, operational group, etc is running efficiently and your staff
knows that you are diligent with matters that affect them. As leaders, we are often
also required to consider events and obligations further down a chain of command.
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Leadership in the public sector context
30. The idea that we are judged by our actions rather than our intentions is by no means
new. We are all aware that the public sector, and Defence in particular, is no
stranger to public scrutiny. We answer to the Australian public and they expect a lot
from us. It is essential that we live up to these standards. In this sense particularly, it
is our actions that count, rather than our intentions.
31. I see this philosophy as another essential element of strong leadership. Action will
always be regarded higher than intent. This applies most of all to managers and
leaders.
32. In an agency sense, leadership is the preparedness to have the organisation become
as high performing as it possibly can, given the constraints of legislation and
resources. Notwithstanding these constraints, which are obviously real in the
Australian public sector context, an agency showing leadership can be expected to
be constantly testing these boundaries, with a view to expand them. The
conversation becomes one of “with these additional resources, or with this change to
our legislation, or with this change to our operating procedures, we can achieve even
better”.
33. As an individual, leadership is not dissimilar to the agency leadership construct – a
preparedness to go as far as possible within existing constraints, coupled with a
preparedness to test the appetite for going beyond.
34. “Change” is not especially relevant to leadership, and is certainly not the driver of
leadership – rather performance is the driver. Perhaps change is needed to achieve
performance, and perhaps it is not.
35. In my agency, admittedly there has been a constancy of change, some of which is
structural, some legislative, and some aimed at improving performance. The
organisation and staff have undergone significant transformations every 6 to 12
months or so.
36. Leadership may be better thought of as a “brand” that might be expected of a
number of people in any given organisation and the Defence Force is an exemplar of
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this. The idea of there being a leadership brand is articulated by Dave Ulrich and
Norm Smallwood in this way;
a. “Some executives just don’t get it. They may say they believe in leadership,
but they don’t act like it. When times are good, they invest in leadership and
proclaim themselves good corporate citizens, but in tough times, leadership
investments are one of the first budgets they cut. What they really need is to
understand how an investment in leadership will help them reach their own
goals and their company’s strategies- and how lack of leadership inhibits
growth and confidence and diminishes value.
b. “Executives who do get it not only say leadership matters, they demonstrate
their commitment in action that is consistent through good times and bad”.
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37. The proposition develops that leadership is something that must be practiced and
worked upon. Leadership should be enduring, and not switched on for special
occasions; instead it should be a brand that is identified with the organisation.
38. Leadership is not singular. While I might be a leader in my organisation, I am not the
only leader, and could not achieve the performance our organisation has without
there being many leaders. Leaders are activist, and leadership is personal. The
characteristics we might see in leaders include people who:
a. Understand the organisation and its purpose
b. Are motivated
c. Have excellent technical skills
d. Have excellent team supervision skills
e. Are resilient and are able to withstand pressure
f. Are open to doing something novel or different to the “business as usual”
construct
g. Are part of a management team that is not interested in the status quo
8
Ulrich D. and Smallwood N., Leadership Brand, Harvard Business School Press, Cambridge MA, 2009, p29
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39. You can translate the idea of a corporate leadership into a personal leadership brand
in several ways. Ulrich and Smallwood suggest you should ask yourself what you
personally stand for and ask yourself how you will demonstrate that point of
difference to others. You reinforce your leadership brand by periodically assess
yourself; ensuring you invest in yourself; and measure your progress against your
objectives of a leadership brand.9
40. My reflection is that at any given time, up to 20% of the organisation’s staff might
qualify as leaders. Strong leadership cannot be put down to one skill or trait, it is the
culmination of a number of factors.
41. It is also about action. No one has ever received praise for something they intend to
do. A leader can play a big role in creating a positive, productive workplace culture.
Contractors and procurement chains
42. Similar to other government bodies and large and small private sector employers,
the Defence Force has involved itself a great deal in supply chains and procurement.
43. Like many large private and public sector employers, there is without question an
invisible workforce that works around the Defence Force – cleaners, truckies and IT
professionals are just a few. They work for and around you though often have very
different pay arrangements. Sometimes these arrangements are unlawful. For those
of you going on to managerial or high-ranking positions, you will need to be
extremely familiar with the procurement practices of the Defence Force and abide
by them faultlessly.
44. Procurement and supply chain problems are becoming increasingly visible in the
private sector. The Fair Work Act has introduced new provisions about supply chain
responsibility. These provisions create a scenario where a person or business
involved in a contravention can be held as liable for the contravention as the primary
9
ibid, from p211
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party. That is to say, if you procure the services of a business that underpays their
staff, you may be held equally liable as that business for the underpayments.
45. An example of this is our current litigation against both Coles Supermarkets and a
trolley collecting company in South Australia. Between January 2010 and July 2011,
Coles contracted a trolley collecting company to work at several shopping centres
around Adelaide. This trolley collecting company then sub-contracted part of the
work to a third party. We have evidence to suggest that this third party collectively
underpaid four employees up to $149,35010.
46. Although Coles appears twice removed from the party directly responsible for this
gross underpayment, by virtue of these new provisions of the Fair Work Act, we
intend to prove that they knowingly involved themselves in this contravention.
47. It’s not just that the Fair Work Act is encouraging businesses to act ethically in supply
chain matters, the community is demanding it, and business is responding. For
instance, Westpac has, at its own initiative, introduced comprehensive measures
and polices that ensure its own procurement practises help its suppliers meet
Westpac’s social, ethical and environment goals11.
48. I believe that this responsibility lies with everyone that can have an impact on the
politics of supply chains. The Australian public holds organisations accountable by
the company that they keep, by the standards that they expect from their suppliers,
so this is more than an ethical issue.
49. I encourage you to consider this; when tendering for work of any type, it’s important
to inform yourself of what obligations your vendors should be meeting when it
comes to minimum rates of pay. Even if you don’t have a statutory obligation there
10
FWO Media release
11
http://www.westpac.com.au/about-westpac/sustainability-and-community/sustainability-
action/suppliers/sustainable-supply-chain/
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is, at the very least, an ethical obligation to ensure those potentially vulnerable
workers in the supply chain are receiving their minimum wages and entitlements.
50. For me procurement practices are a very real, tangible issue in Australian
workplaces, and present an ongoing challenge for leaders in all sectors.
Sham contracting
51. Care also has to be taken in categorising workers as “contractors”. Not every worker
called a “contractor” is actually a contractor, and many will be employees. An
independent contractor is someone who is self-employed and contracts their
services to clients, such as other businesses. Independent contractors aren’t
employees and have different rights.
52. It’s important to understand the difference between independent contractors and
employees and to give them their correct entitlements. Providing an ABN or an
invoice for payment may not mean a worker is an independent contractor. Labelling
people as independent contractors or getting them to sign contracts which state
they are doesn’t mean this either. There are a number of factors that need to be
considered.
53. Misrepresenting or disguising an employment relationship as an independent
contracting arrangement is known as ‘sham contracting’ and is against the law.
Dismissing or threatening to dismiss an employee to engage them as an independent
contractor is also against the law.
Workplace rights and “General Protections”
54. Another important change was the introduction of rights enshrined as General
Protections. That is, protections that prohibit employers from adversely treating or
impacting a person’s employment based on discriminatory grounds including marital
status, sex, sexual orientation, family or carer’s responsibilities or pregnancy. These
provisions also extend to provide protections for certain workplace rights including
the right to engage in lawful industrial activities.
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55. The introduction of these protections into the federal workplace law has been an
important step in working towards a society where all workplace participants will be
free from discrimination. We all have a role to play in ensuring that our workplaces
are free from discrimination. As senior leaders you should ask yourself, what type of
role do you want to play in creating a workplace that is free from discrimination?
And how do you encourage exemplary behaviour from those around you? I suspect
you have to ask yourself these questions in some very tough situations.
Engaging with the benefits of a diverse workforce
56. I see untold value in a diverse workforce and I am not the only one. In a survey
carried out by HR Magazine, 82 per cent of employers said that diversity and
equality were either core to a business, a top priority or important to them12. 57% of
these employers told that they had a diversity strategy in place and a fifth undertook
regular diversity monitoring. I was pleased, though not surprised to see the
Department of Defence’s membership with the Diversity Council of Australia. I
believe it is important that we as public servants lead by example with matters as
important as this.
57. Drawing on skills and experience from staff with different ethnic, educational and
social backgrounds opens up a wealth of possibility to encourage innovation and
creativity. Drawing from a diverse workforce also puts you in a position where you
can interact with a broad client base.
58. The Australian Public Service Commission has also stated that organisations that
capitalise on employee diversity have productive and fulfilling workplaces which help
them attract and retain employees. This also leads to savings in recruitment and
training costs, as well as maintaining corporate knowledge and expertise13.
12
Employers without a diversity strategy are losing out - ACAS
13
APSC Guidelines on workplace diversity
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59. A diverse workforce will also reflect the expectations of the government and the
community about a fair, inclusive and productive public service. This is something I
would recommend you would consider as commanding officers and managers.
Diversity in the workplace will always work in your favour.
60. These issues share a common underlying theme. Be it creating a diverse workforce,
or ensuring ethical practices in supply chains, what’s important are the actions of
those involved in the decision making processes, rather than intentions.
61. I strongly encourage you to consider the issues I’ve raised here today. Diligence in
procurement can positively impact a great number of workers the whole way down a
supply chain. I would also encourage you to consider the benefits of diversity. It is
these types of practices that make an organisation stand out as an exceptional
employer.
Leading ... you within the system
62. You, like I, will need to be a leader within a highly organised and bureaucratic
organisation. The tendency for managers within such organisations is to lead the
managing of specialist activities up to those who are specialists.
63. I suggest that you need to watch for the occasions on which that tendency could
work against your need to be a leader. The group of people you lead will watch you
and assess you on everything you do – including those occasions in which you don’t
overtly do anything. And, of course that is a dilemma for any aspiring leader – how
on earth can you lead where you are impacted so much from other parts of the
organisation.
64. The answer of course, is in how you advocate and negotiate as best you can with the
rest of the organisation, and the people of influence within it.
65. To finish up today, I would like to commend each of you here today in taking such an
important step in your future as a leader within the Defence Force. I recognise that
each of you are making a personal commitment in undertaking this year long
program, and I thank you for your time.
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