Employers are now being forced to confess

Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034 (26 August 2016).

On 19 August 2016, the Federal Circuit Court handed down a decision which heavily penalised a Sydney Restaurateur and his co-operators for failing to pay adequate rates, including penalties, to their staff. The penalties totalled an amount of $292,672 in fines.

More important than the financial penalty however, was the order made by the court for the Restaurateur to engage an independent auditor to conduct a full audit of the business for compliance with the Fair Work Act 2009 and the Restaurant Industry Award 2010 and provide the audit report to the Fair Work Ombudsman.

This order is very significant as it has the effect of requiring an employer to disclose and admit all its other breaches to the Fair Work Ombudsman. In other words, it forces an employer to confess all its yet undisclosed breaches. Consequently this will likely mean that further proceedings and penalties will be imposed on the employer and its management.

This case establishes a precedent that where one breach has occurred, the Court can make an order to audit and discover other breaches at the employer’s expense. The Fair Work Ombudsman is saved from having to do its own investigation.

Then on 26 August 2016, as we were writing the above, the Federal Court in separate proceedings made a similar order for an audit in relation to a cleaning company in respect of underpayments and sham contracting (i.e. representing a worker as a contractor when they are indeed an employee).

With what appears to a new enforcement tactic by the Fair Work Ombudsman, of court imposed audits, it now appears that one breach can lead to forced confessions (i.e. audits). Furthermore, such court decisions highlight the importance that employers ensure that they properly understand what their employment obligations are under both the Fair Work Act and applicable modern awards.

If you have any concerns about such obligations or wish to better understand such obligations as they apply to your business or organisation, please contact our Employment, Workplace Relations and Safety team to discuss.

For more information contact the Employment, Workplace Relations and Safety Team:

William Ward |Special Counsel
(02) 6279 4444