The Risks of Non-Compliance

In Australia, we work in a very complex employee-relations environment, where the majority of business owners are still largely unaware of their risk, and more-so, completely oblivious to their financial risk in terms of fines from the Fair Work Ombudsman for breaches. This is despite some very high profile cases of late, such as 7-Eleven and Pizza Hut.

Some of the most common breaches that we see on almost a daily basis, especially in the small to midsize company level, are the following:

• Employees are unaware of what Modern Award they are employed under = BREACH
• Employees are unaware of the location of the Modern Award(s) in the office (e.g. intranet, staff kitchen) = BREACH
• New hires are not receiving their National Employment Standards – Information Sheet = BREACH
• Employers are not consulting on major workplace changes = BREACH

So why is this proving so difficult for employers and business owners to get right?

The main issue is that they lack the current knowledge required to stay compliant. For example, many business owners are unaware that it is a requirement for an employee’s employment contract to state the correct Modern Award they are hired under and, also, their role classification under that Award. Often the employer has decided to do the HR component themselves, for their business, as a cost-saving measure.

Why is this so important?

It is fair to say that Fair Work are losing their patience with employers and their current levels of compliance, given that the Fair Work Act has been in since the 1st January 2010. Unfortunately, ignorance is not an acceptable defence.

The fines are significant – currently $54,000 per breach, for a company and $10,800 per breach for an individual. Yes, that’s right – you personally could be fined if you knowingly or unknowingly contravene the Fair Work Act.

To give you a sense of how determined Natalie James (Fair Work Ombudsman) is for employers to start to take their legal obligations more seriously, there is currently a bill before Parliament to increase these fines tenfold!

The main issue here is that employers and business owners generally don’t have the specialist knowledge, or expertise, when it comes to assessing the current levels of compliance in their business. What they really need is a diagnostic tool with assessment processes to ascertain their current levels of compliance, to surface their exposure to risk and where they should apply ‘best practice’ procedures across the employee life cycle. Imagine the relief they would feel, being able to say to their Exec or Board, “we have completed an HR diagnostic and for the first time we have a solid understanding of our performance, but more importantly, what we need to prioritise for a compliant workforce.

If this sounds a little like your business, get in touch – we can certainly help you become informed – and with that become a leader of best practice in employee management.