Repercussions of the Fair Work Ombudsman’s Harvest Inquiry Report for the horticulture and wine industries
The Fair Work Ombudsman’s (FWO’s) recent report on its inquiry into workplace arrangements on Australia’s Harvest Trail found widespread non-compliance in the horticulture and wine industries.
Taking a casual approach to engaging labour is now an expensive exercise. During the Inquiry, the FWO recovered more than $1m in wages and $500,000 in penalties. She flagged what’s going to happen next:
- The Harvest Trail will be marked a priority area for FWO compliance activities
- The FWO will rely on the reverse onus of proof available under the Fair Work Act when employers have failed to keep records. Allegations of non-compliance will be considered proven unless the employer can disprove them
- Labour hire and migration arrangements will be closely scrutinised.
Penalties for non-compliance with Fair Work Act obligations* multiply tenfold where a “serious contravention” is involved. Those who knowingly engage in a systemic pattern of conduct that breaches the Act can be fined up to $126,000 (individuals) or $630,000 (companies) per offence.
That’s a harsh penalty for deliberate flouters of the law.
The good news is that those who obtain a commercial advantage by exploiting labour (often from overseas) are more likely to be crippled by large fines. This levels the playing field for honest agribusinesses.
However, with the burden of overtime rates for casuals in horticulture looming large (and the risks of engaging casuals at all being highlighted by the recent WorkPac case), what can good employers do to manage this additional risk?
Get piece rates right
There’s no substitute for reading the applicable award but here’s a summary:
Horticulture: the piecework agreement between employer and (individual) employee must be in writing and signed. The agreed rate must enable the average competent employee to earn at least 15% more than the minimum hourly award rate. The minimum hourly rate includes the casual loading (if the worker is a casual) but not shift loadings or overtime.
Wine Industry: The agreed rate must enable the average competent employee to earn at least 20% more than the minimum hourly award rate. The minimum hourly rate includes the casual loading (if the worker is a casual) but not shift allowances, penalty rates or overtime.
The written agreement must name the parties to the agreement, state the date the agreement commences operation, and set out which clauses of the award do not apply. It must be signed by the employer and employee, and, if the employee is under 18, by their parent or guardian. The piecework rate must be specified, setting out that this rate will apply instead of minimum wages. For employees with limited English the agreement must be translated.
Under each award, the employee must receive a copy and the agreement must be kept as a time and wages record.
Some employers get into trouble with piece rates by applying group rates for collective effort. This does not track an individual picker’s performance and is not a valid piece rate agreement. Since hours of work are typically not recorded in these circumstances, compliance checks become difficult for the FWO. Employers can then be required to prove their workers have received minimum rates of pay (hard to do), or face penalties and underpayment claims.
The other area to focus on is setting the right piece rate. This must be based on objective evidence. Some industry groups cooperate to publish a piece rate guide for each season. Best practice involves keeping productivity records that justify the piece rate set.
Get record keeping right
It’s possibly the most boring and frustrating part of running a business, but record keeping equips an employer to prove their innocence. Check that your record keeping arrangements meet the requirements of the Fair Work Act.
Know your own workplace arrangements
If you delegate the recruitment, management and remuneration of labour for your operations, make sure you know that your contractors are doing the right thing. If you don’t, you will be held liable for their wrongdoing. Require contractual assurances regarding compliance and monitor your supplier’s performance to ensure those assurances are met.
If you think you need help with piece rates or engagement of labour generally, please contact Thea Birss for assistance by email (firstname.lastname@example.org) or mobile (0413 301 815).
* under the National Employment Standards, Awards, the minimum wage, and payment/deduction provisions of the Fair Work Act.