Each financial year, the Fair Work Ombudsmen (FWO) releases its Compliance and Enforcement Priorities. These are designed to highlight areas where the FWO believes there to be a lack of employment compliance, or potential for underpayments, within a specific industry or sector and where they will be devoting their attention and resources in the coming year.
What are the 2022-23 Priorities?
The FWO’s priorities are comprised of two categories, being ‘enduring priorities’ and ‘priority sectors and issues’.
The priority sectors and issues are:
- Fast Food, Restaurants, and Cafes
- Sham contracting
- Large Corporates and University sectors
- Contract cleaning
The enduring priorities are:
- Small business employers and employees
- Vulnerable employees
What has changed?
Whilst there are common themes each year, it can be more beneficial to look at the changes in priorities from year to year. The University sector is the ‘new’ inclusion to this year’s priorities and has come amidst plenty of media coverage over large scale underpayments that occurred at universities across Australia. The over-reliance on casual employees and failure to compensate employees for all hours worked both inside and outside classes has been labelled as potential causes of these large scale underpayments across a number of universities. Through the FWO signalling their focus on universities, it is clear that they believe there are widespread underpayments across the university sector, not just the handful that have already been caught out.
Interestingly, Franchise arrangements have been left off this year’s priorities. In previous years there had been a heavy focus on franchise arrangements within the FWO’s priorities. It could be speculated that the FWO’s increased surveillance and enforcement within the area led to a higher uptake in employment compliance, meaning that the Franchise area is no longer seen as a priority. Whilst it is a positive for Franchise businesses overall, it isn’t a reason for franchised businesses to become complacent.
Key takeaways for businesses
The first key takeaway for businesses is to understand that the FWO is still active in their enforcement. Regardless of whether a business falls into a priority area listed by the FWO, it is important for all businesses to remain proactive in their employment compliance activities. Becoming complacent based on the assumption that the FWO won’t be investigating specific types of businesses, is a great way to become non-compliant and risk being reported and audited by the FWO in the future.
Universities, schools, and education-based businesses should be all on high alert. It has become obvious that the nature of certain roles within the industry are at a higher risk of being underpaid, possibly because of poor systems and surveillance. For organisations within this sector, it is important to become proactive in ensuring that their employees are being paid correctly.
We’ve seen the FWO previously target franchises and now universities heavily, whilst also continuing to look at restaurants, cafes, fast food outlets, contract cleaners and agricultural businesses, amongst others. Whilst not a certainty, it seems likely as new areas of concern for underpayments emerge, that other sectors or organisation types who have employment and payroll compliance issues that will be uncovered. For businesses unsure of the level of their compliance with Australian employment laws and payroll obligations, it can be a better option to get on the front foot as opposed to waiting for a possible unwanted knock on the door from the FWO.
Performing proactive payroll audits or having payroll rules and systems reviewed, are 2 great ways to identify potential breaches and demonstrate your efforts in improving employment compliance. Here at ER Strategies, we are experts on payroll audits and employment compliance and have assisted many businesses across many types of sectors manage their obligations.
If you want to find out more about our audit services, click here.