Is Fair Work Really Protecting Employees?

One of my clients rang me recently in a panic – they had just received a notice from the Fair Work Ombudsman with a claim from an ex-employee that they had been underpaid.

The Fair Work Ombudsman was offering to mediate the claim, and as an alternative to a full-blown hearing, mediation was a much better option.

Now, this client is in a very specific industry – transporting passengers all over the state of Western Australia.

WA is in a unique position given the long distances travelled – this company runs services from Perth to Broome and everywhere in between. We have worked together for a while and I understand the business and the relevant modern award, but there are a number of inconsistencies and ambiguities in the Award that we haven’t been able to get a definitive answer on. We hoped that the mediator appointed by the Fair Work Ombudsman would be able to give definitive advice, but although she is a very competent and fair mediator, it soon became apparent that this depth of knowledge was outside of her scope.

The issue was referred to the FWO Knowledge team, who referred us to the award and also some case law to get a clearer understanding, but even they acknowledged that there was no clear definitive advice. The ex-employee concluded at this point that it wasn’t worth his while pursuing the claim so the mediation process came to an end. Whilst this was a relief, it had exposed the business to the risk of further claims. Having taken advice from an employment lawyer, we concluded that the best course of action was to clarify how this business applies the award in an Enterprise Bargaining Agreement.

So that is what we are in the process of doing. Drafting an EBA (which currently runs into 40 pages), commencing a formal bargaining process with the employees, holding a ballot, and if the majority of employees are in favour of the agreement, we will lodge this with Fair Work, and keep our fingers and toes crossed that it is approved by the Fair Work Commissioner.

This comes at a not insignificant cost to the business. A business which is providing a vital service to customers in regional WA. And a business that provides employment for up to 20 drivers who are happy with how their rosters are organised, enjoy the job security and are relatively well paid (there is never a problem attracting new drivers to work for the company).

The Enterprise Agreement will end up costing the company more in terms of wages, for no additional return in productivity or profitability. In fact, the owner of the business is having to go out on the road to cover drivers’ holidays, otherwise the business is not sustainable.

The Fair Work Ombudsman referred us to one ruling by the commissioner which said even though the decisions made in the ruling may make the business unprofitable and result in people losing their jobs, the award as written must be followed.

It does seem ludicrous that the legislation which is put in place to protect employees may end up with them losing their jobs and livelihood.

In recent times we have seen Fair Work over-turn awards which may disadvantage employees (Coles had negotiated an award with an all-inclusive hourly rate which was better than the award. But for some employees who work evenings and weekends lose out overall as they don’t get penalty rates). We have also seen Griffin Coal in Collie successfully apply to Fair Work to end an agreement early due to the change in economic conditions, although this is being appealed by the AMWU.

The changes to penalty rates in hospitality and retail have been well publicised, but the end result was a bit of a damp squib, with the casual Sunday rate for hospitality staying unchanged at 175%. So even a level 1 food and beverage attendant must be paid a minimum of $31.86 per hour on a Sunday. That’s a lot of cappuccinos that need to be sold for a café owner even to break even. With the changes to society demanding 24/7 opening, and many more employees choosing to work evenings and weekends to fit in with study and family care…how relevant are penalty rates in 2017?

Of course we need to protect the lowest paid from exploitation, but when it creates an impost on small business which is unsustainable, who is it really serving?



Jayne Griffiths is Managing Director, with 15 years plus experience in senior HR roles as well as well as business coaching and leadership development.
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