Huge penalty risks if HR policies non-compliant with Fair Work legislation

Failing to comply with federal workplace laws had become a ‘cultural norm’ in some parts of the labour market, putting organisations – and now, individual leaders and HR professionals – at risk of huge penalties.

Consequently, in an effort to encourage employers and their advisors to take their responsibilities more seriously, the Federal workplace regulator has signalled its willingness to hold HR managers personally responsible for “actions or inactions you help the company make”.

The Fair Work Ombudsman, Natalie James, made the observation in a recent address to Human Resource managers, arguing that HR managers are tasked with establishing strategies for, and compliance with, workplace laws.

As a result, they are responsible for both their company’s workers and the positions contracted to a labour supply chain – and they could therefore bear the brunt of penalties for non-compliance.

With higher penalties against employer non-compliance recently proposed by the Federal Government, the Fair Work Ombudsman put her audience on notice.
“If you know that your employer or client is running two sets of books, or keeping false records, or not paying the employees their full entitlements, know that the new higher penalties may soon extend to them, and to you,” she said.

Alongside government imposed penalties, James noted that the broader community typically saw companies as accountable to all employees, internal or external, and reacted decisively to news of employee exploitation.

The Ombudsman argued that investigations into cases of employee exploitation reveal that even when a company sourced its labour through an external supply chain, that company had still contributed to a contravention of workplace laws, insofar as it controlled the budget allotted for outsourced labour.

Cases of worker exploitation were typically driven by a combination of “low skilled work, price-driven procurement [of labour], a proliferation of entities in the supply chain or network, tight profit margins, and vulnerable, often migrant workers,” she added.

This statement establishes a new benchmark position in workplace accountability, obliging HR managers to ensure their strategies are fully compliant with Federal workplace laws.

To ensure these obligations are being fulfilled, it is essential for HR professionals to undertake Human Resource Audits periodically. The benefits of an effective HR audit are wide-ranging and significant, as they ensure that procedural and compliance issues are addressed.

Along with verifying that a company’s workplace policies and practices are in full compliance with Federal workplace legislation, a comprehensive HR audit should examine other employee policies and procedures. This includes the organisation’s strategy, the employee benefits and compensation system, the channels and processes available for employee/employer communication, the company’s recruitment procedures, and its performance evaluation methods.

As an experienced and independent facilitator of Human Resource Audits, iHR Australia also offers a third-party auditing process that is systematic and objective, examining all workplace policies and procedures. Our auditors can tailor the scope of an audit to address specific or preferred activities.