The Ombudsman defended its decision to publicise its prosecution of Lane, Drummond and the Hennesy Lane Hair Design salon and said it was “usual practice” to issue press releases for prosecution cases.
A spokesperson for the Ombudsman said the Ombudsman also issued press releases when a prosecution was unsuccessful. However, when SmartCompany asked for an example of such a press release the spokesperson was unable to identify any.
Since July 1, 2009 the FWO says more than 95% of its prosecution cases have been successful.
A spokesperson for the Ombudsman says the media releases relating to the prosecution of Lane, Drummond and Hennesy Lane Hair Design simply summarised the allegations made by the FWO in the Statements of Claim filed with the court.
“The media releases also briefly identified that the involvement of vulnerable, young workers was a key factor in the agency’s decision to commence the prosecutions,” the spokesperson said.
The spokesperson said it was not appropriate to make any further comments about the prosecution of Lane, Drummond and the Hennesy Lane Hair Design salon.
To date, no press release has been issued by the Ombudsman in relation to the settlement of the case against Lane, Drummond and Hennesy Hair Design.
The Ombudsman’s spokesperson stressed that in most cases the Ombudsman does not prosecute complaints.
The spokesperson points to figures which show in 2011-12 the Ombudsman finalised 28,412 complaint investigations and commenced 51 civil penalty litigation cases, indicating that in the majority of cases the FWO does not commence a prosecution.
“The Fair Work Ombudsman uses civil penalty litigation sparingly, preferring in the large majority of instances to address cases of non-compliance with Australian workplace laws using voluntary compliance measures,” the spokesperson said.
The spokesperson also revealed why the FWO chooses to pursue certain cases and why it opts to sometimes publicise prosecutions before any finding has been made.
“When making decisions in relation to compliance actions, the Fair Work Ombudsman takes into account explanations of non-compliance and the wider context of a duty-holder’s decision-making,” the spokesperson said.
The Ombudsman has a litigation policy which guides its decision on whether or not to commence litigation.
“The FWO’s aim is for its litigation activities to be transparent, accountable, constructive and effective,” said the spokesperson.
“The FWO generally commences litigation in situations where duty-holders refuse to rectify non-compliance issues voluntarily, or where serious or repeated contraventions are involved.”
Other factors the FWO considers in litigation decisions include the public interest in proceeding, the need to deter others from similar contraventions, the involvement of a vulnerable community group such as foreign workers or young workers, whether there were significant consequences, and whether there is a need for judicial clarification of workplace laws.
“The FWO issues media releases in relation to its litigations to support compliance with Commonwealth workplace laws,” says the spokesperson for the Ombudsman.
If your business is prosecuted by the FWO there’s not much you can do to avoid the negative publicity as “they are a name and shame organisation”, according to M+K Lawyers partner Andrew Douglas.
“The FWO is there to enforce obligations under the Fair Work Act. Its two major areas are underpayment under relevant awards, and the second one is dealing with misclassification of people as contractors when they are employees, particularly sham contracting,” he says.
Douglas warns that in cases of underpayment employers often run into trouble with the FWO by paying employees greater than the award rate but then setting off various payments like overtime and annual leave loading against this.
“Employers have to understand you must have appropriate set offs if you are rounding up into one base figure. The other crucial thing is to do the maths and send it to the FWO when they raise it and immediately push it to mediation, because they will pursue you,” says Douglas.
Douglas says sham contracting is a real focus for the Ombudsman, which it is likely to continue pursuing.
“If you are guilty, make really clear admissions quickly and engage quickly with the FWO to explain why. If you don’t engage quickly you run a full risk of them running a prosecution and incurring penalties,” says Douglas.
Douglas says employers who are guilty of underpayment or engaging in sham contracting should look to mediate with the FWO to avoid prosecution and the adverse publicity that goes with it.
“You do have a capacity to mediate and the FWO facilitates that, and if you do it the chances of resolution are very high,” says Douglas.
“In the last year, although these things regularly come across our desks, we have had not one prosecution.”
Cara Waters is a former SmartCompany editor. Previously, Cara was a senior reporter for the Financial Times’ website and worked for The Sunday Times in London.
