What is a Fair Work Compliance Notice? - Fairtime

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What is a Fair Work Compliance Notice?

Fair Work investigations can be time consuming and leave business owners in a stressful situation when they are issued a Compliance Notice.

Being on the back foot and hoping that they will stop knocking on your door will not solve anything. 

Compliance notices are used by the Fair Work Ombudsman to get clarification on something when they hold 

In this way, they function like a strip search by the police. They are legally authorised to ask you to comply, and not complying can result in heavy fines and further legal action against you. 

On the spot fines are also used by Fair Work Inspectors when they see a failure of proper timesheet and payslip records available to inspect. This has been the trend with Inspectors who have focused their proactive investigations towards visiting Fast Food precincts in Cities. 

Compliance Notice mistakes to avoid when dealing with Fair Work

Put simply, a compliance notice is an enforcement tool that is available to the Fair Work Ombudsman under the Fair Work Act 2019. 

It is a formal document putting an employer on notice to fix a contravention of Australian workplace laws. 

Fair Work Inspectors will issue a compliance notice if they receive a complaint and they can conclude from looking at the evidence provided by the employee that a contravention has occurred. 

A contravention of Australia’s workplace laws can happen where the worker’s legal minimum entitlements have not been met as provided under the relevant Modern Award.

How do I respond to a Compliance Notice?

Step 1: Read the Compliance Notice carefully

Bob is an employer for Simon who believes he has been underpaid his overtime and penalty entitlements for a period of several months. 

Bob has just received a compliance notice and it is several pages long. It can be overwhelming to know where to start. 

Bob will need to review the compliance notice covering letter to understand the background of the matter and why the Fair Work Inspector has decided to issue the notice. 

Bob will then read the compliance notice, paying particular attention to the following sections:

Details of the contraventions’

This section will give specific details around what rules have been contravened. 

They will specify the employees affected and list each contravention according to the relevant pay periods. This will be helpful for confirming and calculating the amount owed. 

Required action under this Compliance Notice

As Bob is being investigated for potential underpayments, the next action he will need to focus his attention on is to ‘calculate and rectify underpayments’

The notice will also include a requirement to provide ‘reasonable evidence of steps taken to comply with’ the Compliance notice. This means that Bob will need to carefully tabulate and create a schedule setting out historical payments made and additional entitlements to be paid now. 

Bob is worried and feels confronted by this compliance notice. However, this is actually an opportunity for him to fix the underpayment without any further fuss. 

He can avoid court, any admission of guilt and avoid any additional infringements or other consequences. The matter will be closed as soon as Simon is paid the money he is owed. 

Step 2: Calculate the amount owed if a staff member has been underpaid

Each contravention will be separately listed by their respective time periods in which they took place. Bob will also be given information about the Overtime Contravention including any time and a half and double time that was not paid on specific days. 

The time periods listed for each contravention (e.g. Period 1, Period 2) may not be aligned to your business’s own pay periods. 

The Overtime Contravention also sets out two different types of entitlements owed to Simon:

– Overtime entitlements

– Overtime meal allowance entitlements

In order to confirm the details set out in the notice, Bob will need to first have on-hand any related employment contracts, payslips and bank account statements. 

Bob can then use a timesheet calculator to calculate the total amount of hours worked by entering start and end times, excluding any breaks. He may also seek to use excel timesheet formulas to document all worked hours by Simon. 

Timesheet calculators that Fairtime recommends include:

–  Timesheet Calculator with Lunch Breaks for time card calculator with breaks

Work Hours Calculator Excel to calculate the hours worked for any shift

Timesheet Calculator Australia for Gross Pay and Overtime calculation Australia

Once he has this information, he can then contact his Industry Association or a Modern Award employment law specialist to consult on the appropriate pay rate for Simon. These pay rates require a deep understanding of the relevant Modern Award and pay rates can vary  according to Simon’s experience, duties, qualifications, levels and grades as well as any industry specific allowances. 

Bob decides to contact Fairtime because he wants advice on what entitlements Simon is owed so that he can resolve the matter in the quickest way possible. 

Step 3: Pay the employee and rectify the underpayment 

When making the payment owed to Simon, Bob must ensure that it is paid before the due date on the Compliance Notice. It is best practice to let the Fair Work Inspector know when you anticipate the payments to be finalised. 

If Simon is no longer employed by Bob, Bob can contact the Fair Work Inspector who issued the notice to check Simon’s correct banking information. 

Step 4: Show proof of payment to Fair Work

The Fair Work Ombudsman will review any evidence that Bob provides to prove he has complied with the Compliance Notice. 

It is important that Bob speaks to a professional so that they can accurately collate and present the evidence in the format requested. 

At this stage, Fairtime has successfully remedied the underpayment and the matter will be closed. Bob has avoided additional fees, costs and penalties from court proceedings. 

What if I don’t comply with a Compliance Notice?

If Bob does not provide evidence that he has complied with the Compliance Notice before the due date, the Fair Work Ombudsman is entitled to commence legal proceedings for failure to comply with a Compliance Notice. 

It is in Bob’s best interest to respond to the Compliance Notice to avoid the matter escalating and to clarify why he does not believe there has been an underpayment. 

The Fair Work Inspector will look at what is called ‘best available evidence’ by looking at any employee records supplied to them. In this way, they only hear half the story. 

As we mentioned above, the Compliance Notice is a great opportunity for Bob to avoid being on the back foot as the investigation is carried out. 

If you choose to ignore a Compliance Notice, you risk:

     

      • * legal proceedings against individuals and your business (including directors, managers, accountants and advisors)

       

        • * signficant financial penalties (up to $6,660 per breach for an individual or $33,300 per breach for a company)

         

          • * court ordered back payments to employee/s (including any interest applicable)

           

            • * reputational damage

             

              • * time and money responding to legal proceedings

            What can I do to prevent future compliance problems?

            At Fairtime, we understand that underpayments can occur on a one-off basis or be a repeated oversight. It can be difficult to manage staff and several tools to ensure that a simple process is done correctly. 

            Underpayments can also arise as a result of unlawful deductions for failure to give notice under the Modern Award and other staff entitlements that are often misunderstood. 

            For businesses that overlook allowances and believe their employees forfeit their entitlements by failing to give notice, it becomes an extremely costly mistake.

            Bob has just expanded his workforce to include several new full-time and part-time workers. He thinks that the Fair Work Ombudsman might return so he wants a way to ensure he is compliant at all times in the future. 

            Fairtime can work with Bob to ensure that he not only accurately calculates all monies owed, but to bring a cost-effective way to ensure all pay records are compliant with Australian workplace laws. 

            Got a Question about a Fair Work Compliance Notice

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