Small Businesses at Risk from Fair Work Ombudsman

17 Jul 2011 |

A penalty handed down by the Fair Work Ombudsman in a case of an employer under paying employees, and the announcement that his agency would be stepping up its compliance activities, should act as a warning to small business owners in Australia. In another case the complicated nature of the Fair Work Australia unfair dismissal rules was demonstrated.

In the unfair dismissal case a worker had been sacked due to repeated breaches of workplace health and safety regulations. Despite the constant messages from workplace health and safety authorities that employers must provide a safe workplace, the employer was made to rehire the sacked worker.

In handing down its decision FWA stated that the dismissal was not unjust or unreasonable but it found the dismissal harsh and the employee had to be re-employed. The dismissal was harsh because of the personal circumstances of the employee and because the worker had not been given one final warning about the consequences of his unsafe work practises. This leaves employers with the clear impression that FWA places a higher importance on bureaucratic systems and procedures than employee safety.

The other case involved a company that underpaid two of its employees by an amount of approximately $20,000. In addition to a penalty imposed on the company of $148,000 a personal fine of $29,700 was imposed on a director of the company. The director had claimed he did not know about the underpayment as he had employees that looked after his payroll.


Adrienne Unkovich, Managing Director of Workforce Guardian, when commenting on the fines handed down for underpaying staff said, “the Fair Work Ombudsman has made it quite clear that lack of awareness will not be accepted as a defence if an employer is found to be in breach of their legal obligations”.

The only way to avoid being prosecuted by FWA is to be fully compliant with the ten National Employment Standards that commenced on 1 January 2010. These are:

  • Maximum weekly hours of 38 hours per week, plus reasonable additional hours,
  • Allow workers flexible working arrangements for parents and carers,
  • Provide unpaid parental leave of up to 12 months,
  • Four weeks of annual leave a year plus an addition week for certain shift workers,
  • Ten days of paid personal leave that includes sick leave and two days of paid compassionate leave for full time employees,
  • Allow workers involved in volunteer emergency activities unpaid leave and up to ten days of paid jury service leave,
  • Allow employees to take public holidays with pay unless a reasonable request is made to an employee to work,
    • Give up to four weeks notice of termination for employees 45 and under, and five weeks if they are over 45 and worked at least two years. In addition up to 16 weeks redundancy must be paid depending on the employee’s length of service, and
    • Provide a Fair Work Information Statement to all new employees.

If you are a small business owner that has employees ask yourself these few simple questions:

  1. Do you know what modern awards cover and apply to your employees?
  2. Do you maintain accurate records of employee leave entitlements?
  3. Do you know what the rates of pay are for your industry?
  4. Do your employees get a pay slip that has all of the required information within one working day of them being paid?

If you answered no to any of these questions you may get a nasty shock if you come to the attention of Fair Work Australia.


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