Matt Keogh (Burt, Australian Labor Party) Share this | Link to this | Hansard source

Those on the conservative side of politics often like to talk about their perceived need for industrial relations reform. The systemic exploitation of workers and noncompliance with legal obligations, highlighted by the discovery that 7-Eleven franchises, Caltex servos, Domino's and Pizza Hut were underpaying workers, just goes to show that there is something wrong with the way that we regulate employers in this country.

One of the goals of the Fair Work Ombudsman in carrying out its enforcement activities is general deterrence. So, as well as specifically punishing an employer found to be in breach of the law, it is expected that the ombudsman's enforcement activities will influence the compliance behaviour of other employers. General deterrence is even a key pillar of the Fair Work Ombudsman's strategic plan. But this approach doesn't seem to be working. In fact, I'm not sure that the Fair Work Ombudsman is even attempting to carry out this part of its strategic plan, because a study conducted by the University of Melbourne's Centre for Employment and Labour Relations Law found that most employers thought that the risk of getting caught for exploiting workers was highly unlikely, unlikely or fifty-fifty at best.

One may say almost as a result, we see reported in the Fair Work Ombudsman's last annual report that more than a third of audited businesses had committed a monetary contravention of industrial relations legislation. It also reports that, of the 29,900 reports of noncompliance to the Fair Work Ombudsman, only six per cent were addressed through enforcement action. With such a low rate of reprisal, it is no wonder that this agency is seen as a toothless tiger, and employers are not deterred from ripping off their workers.

What's worse is that, even in instances where the Fair Work Ombudsman finds an employer has been involved in criminal activities, the Fair Work Ombudsman then fails to refer the case for criminal prosecution. Just this week, the Fair Work Ombudsman trumpeted its success when a dodgy labour hire firm— which failed to pay an apprentice mechanic and used the visa holder's wages to make progressive down payments on an expensive European car—was hit with the maximum penalties and had his case referred to the Commonwealth Director of Public Prosecutions for criminal proceedings. But the case wasn't referred by the Fair Work Ombudsman. No, this case came before the courts not for the failure to pay the worker but because the Fair Work Ombudsman eventually took civil action after the employer refused to comply with their compliance notice.

According to the judge hearing the case, the actions of the employer were so appalling that the judge not only imposed the maximum financial penalty but also referred the matter—he himself referred the matter—to the Commonwealth DPP. The Fair Work Ombudsman, Natalie James, applauded the court's decision, saying that 'it delivers a clear statement that ignoring a compliance notice will not be tolerated'. I think the real message that this sends is that, if you underpay your workers and are involved in criminal activities by doing so, as long as you comply with any notices that might eventually be issued by the Fair Work Ombudsman—should you ever be issued with one—you needn't worry about civil or criminal court proceedings being brought by this regulator, no matter how appalling your behaviour might be.

So, for little more than a slap on the wrist, bosses can get away with rorting the system and can rest easy knowing that they are unlikely to ever face any real consequences. Imagine the furore if the reverse were true. If an employee was found to be stealing from their employer and had produced fake documents in order to cover their tracks, they would definitely be facing criminal charges. But, as this dodgy labour hire company found, this is not the case when you steal from your employees.

The Criminal Code makes it an offence to deliberately provide false or misleading information to government investigators. This crime carries a penalty of 12 months imprisonment—something that cannot be avoided by putting your company into administration. The Fair Work Ombudsman litigation policy states: 'Where the FWO becomes aware of offences having occurred, it will, in the ordinary course of events, refer a brief to the Commonwealth Director of Public Prosecutions.' As a former prosecutor, I know that many government agencies regularly provide briefs to the CDPP for possible prosecution. However, the last time a criminal prosecution was mentioned in the Fair Work Ombudsman's annual report was in 2008, almost a decade ago.

As long as our national employment standard regulator maintains its reputation as a toothless tiger, there will always be businesses out there that are willing to take a gamble—an all-too-easy one at the moment—on the illegal exploitation of our workers. In order to see a change to this sort of thinking, the Fair Work Ombudsman needs to get tough and start taking real action. So much for this government being about protecting the rule of law in industrial relations laws. (Time expired)