Sushi operators penalised $125,000
The Fair Work Ombudsman released its findings today against the operator of two sushi outlets in Queensland for breaching Australia’s workplace laws, and it is timely reminder for all directors.
The Fair Work Amendment (Protecting Vulnerable Workers) took effect on 15 September 2017 after a string of high-profile underpayments of vulnerable workers (ie, Dominos, Caltex). This change increased penalties for serious contraventions of workplace laws and this is the first decision by the FWO using the new amendment.
The Sushi operators in question breached the act by:
- Underpaying minimum hourly rates, weekend penalty rates and overtime rates. Annual leave and personal leave entitlements were also not accrued. Three directors were involved in the breaches which were essentially a lack of record keeping and underpayment. And remember, this new law makes franchises and subsidiaries including holding companies liable.
- The respondent’s admissions of liability meant that the FWO did not have to rely on the “reverse onus of proof laws” for underpayments where inadequate records are kept or pay slips not issued.
This case is a timely reminder of the requirement to keep accurate records for both pay and other award entitlements. The most effective method of which is to ensure you combine an effective HRIS (HR Information System) and payroll system (combined into one where possible) with expertise and advice that meets a HR-Employment Relations pillars of due diligence. These tips include
Tip 1. A HRIS that where possible, automates your payroll with awards, variables including shift management and can warehouse key employee information including Employment Contracts. Additionally, it should be able to store all employee data needed to execute payroll, including TFN, superannuation etc.
Tip 2. The HRIS should accrue and manage key personal information including leave, long service leave (all forms of leave) qualifications, certifications, licenses, just to name a few. Where possible, look for one that has ESS (Employee Self Service) to expediate and automate all key personal information. It also allows managers to monitor and approve what they need directly from their phone. According to recent surveys, home PCs have been in steady decline since the introduction of the Apple tablet and android phones in the late 2000s. Now we have Netflix, NBN when it works, and gaming consoles all of which do not need a PC. IMO, the need to complete day to day administrative tasks on a phone and/or tablet is a larger priority than being able to process it on a stand alone PC.
Tip 3. If you need reporting in order to keep up to date with key HR information (ie, leave lapsing, staff turnover, shift info, etc), then do not worry too much if you cannot find a HRIS that has it all, because it does not exist. Instead, this is where a second piece of software called BI (Business Intelligence) becomes important and it bolts on to the back end of both your HRIS and any other systems you may need, including accounting and safety. However, you can either do your own research in this area or look for a professional. But remember, unless they are a Strategic HR professional, they won’t know what HR data they need, or how to use it. So if you think you do need this, best to keep it simple at first and low cost.
Tip 4. Ensure that this information is kept in the HRIS and although many rely on accounting systems to warehouse some of this information instead (ie leave), I do not recommend it only be stored in the accounting system. The accounting system recognises and manages it for financial purposes, it is not a central source of truth for auditing HR related information. That is what a HRIS is for and in 20 years of working with ERPs and the now post 2012 Xero market boom of accounting and HRIS bolt ons, there is no accounting system that meets its end to end Fair work obligations, and nor should there be, that is what an ERP is for. The main risk for splitting your FWA, NES and award obligations into two systems is if one (most likely the accounting system) is discontinued. Many accounting platforms will not allow you to access data, including employee data after you cease payment of your monthly fee. Accountants have their favourites and most will require clients to migrate from one system to another when they move from one accountant to another. So my recommendation, do not use your accounting system for Fair Work Compliance, that is your HRIS/payroll systems job.
Tip 5. Ensure your expert on the other end of the phone has Employment Relations/Industrial Relations experience (at least 3-5 years of dedicated experience) and a qualification to back it up (or is studying one). The qualifications you want to look for include industrial relations/employment relations/employment law. And remember, for many lawyers these are not core units but electives. Some of the best employment lawyers around have decades of experience in this area so there is no need to worry about what units they did in their law degree, but they are not HR experts. This is a different field and as of the late 2000s, there has been a strong movement to professionalise HR. As a result, Strategic HR is gaining in popularity and most importantly, this shift in professional expertise means HR can directly contribute towards balance sheet savings and FWA compliance simultaneously.
Tip 6. Employment Relations is much more than just calculating how much to pay your employees, or how to minimise your liability when terminating employment. Hence why I believe that the best ER experts you can access have both HR and ER qualifications and experience. They ensure you are both compliant, AND can provide you with information that will minimise long term issues ranging from conflict to employee engagement.
There is no legal requirement for you to use any of these tips, however, each of them represent pillars of due dilligence that when combined, mean you have several layers of effective risk management when it comes to FWA compliance. And remember, there is a proposal to expand this legislation to include both criminal and civil penalties.
Summary of pillars of due dilligence:
- Appropriate HRIS/payroll system that records and manages all pay and other employee entitlements/information centrally (known as a single source of truth). Do not spread your personal information across multiple systems, this increases your risk of getting key information wrong, or lapsing in your record management. I call this “risk systemisation” and it includes expanding into appropriate policies, procedures etc.
- Access to qualified and experienced HR-ER/IR professionals (not just one or the other only). Degree qualified with at least 5 years plus dedicated experience. There are several FWC cases whereby the “HR Manager” or “Director” made erroneous decisions leading to a FWC adverse finding/s. In the U.K, CIPD (HR professional body) now requires its members that wish to specialise in ER/IR, to complete an appropriate post graduate degree in IR/ER.
There is a lot more I can recommend and in detail, but these are the fundamentals that should be established by every business, not matter its size.
For more information on the Sushi case, check out the link here.