A Sydney cleaning company has entered into an enforceable undertaking with the Fair Work Ombudsman, after it was found to have underpaid more than 70 workers by almost $60,000.
In the latest case of the regulator cracking down on the underpayment of workers, the ombudsman has ordered Fleet Cleaning to apologise and repay the affected employees; employ a full-time book-keeper to ensure future payments are compliant; and audit its own compliance with workplace laws each year for the next three years and report the findings to the ombudsman.
Fleet Cleaning’s sole director, Paul Fitzgerald, and other managerial staff will also be required to undertake formal, accredited workplace relations training.
The undertaking follows two audits of the company in 2011 and 2013 by the Fair Work Ombudsman. The first audit found that Fleet Cleaning underpaid 19 workers more than $18,000, while the second audit found that 53 former and current employees were short-changed more than $40,000.
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The ombudsman found Fleet Cleaning paid the employees a flat rate for all hours worked that did not comply with the Cleaning Services Award 2010. The underpayments ranged from $3635 for one employee to around $1000 for 16 employees.
Enforceable undertakings have been part of the Fair Work Ombudsman’s armoury since 2009, and the purpose is to focus on tasks that educate employers about their workplace obligations instead of initiating court proceedings.
“Many of the initiatives included in enforceable undertakings like compulsory training sessions help to build a greater understanding of workplace responsibilities, motivate the company to do the rights thing and help them avoid the same mistakes again,” said Fair Work Ombudsman Natalie James in a statement.
Employment lawyer Peter Vitale told SmartCompany enforceable undertakings “seem to be a tool that is being used more and more to encourage compliance”.
Vitale described the option as “certainly a positive alternative in the right circumstances” as it does not expose both employers and employees to the cost of litigation, which will “almost inevitably exceed the value of the underpayment”.
“It’s taking the carrot, not the stick approach and can often be more effective than heavy financial penalties that the directors of the company may not be able to pay,” he said.
However, Vitale said this particular undertaking is unusual in its scope.
“It appears to be a fairly extensive undertaking, although previous cases have required companies seek advice and training,” he said. “The requirement that the company hire a book-keeper is a more recent development. “
“It is clear from the structure of [the undertaking], with its requirement that the business report back, that the focus is quite properly on compliance,” he said.
“These cases demonstrate the importance for employers to understand their obligations,” said Vitale of the lessons for other business owners. “Their investments in advice and proper book-keeping practices are going to be well worth it compared to the alternative of spending time and money on undertakings from the ombudsman or on litigation,” he said.
SmartCompany attempted to contact Fleet Cleaning but did not receive a response before deadline.