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Navigating Fair Work Compliance Amidst Rising Penalties and New Regulations – February FWC roundup

Small businesses are the backbone of the Australian economy, providing employment opportunities and driving innovation. However, recent actions by the Fair Work Ombudsman (FWO) highlight the growing risks for businesses that fail to comply with workplace laws. With increasing penalties for wage underpayment, record-keeping failures, and breaches of workplace rights, ensuring compliance is no longer optional—it is essential.

Fair Work Ombudsman Crackdowns: Lessons for Small Businesses

The FWO’s recent enforcement actions serve as stark warnings for small businesses. Failing to comply with Fair Work regulations can result in hefty fines, reputational damage, and even legal action. Below are some of the most notable cases that illustrate these risks.

Case Study 1: Severe Penalties for Underpayment and Record-Keeping Breaches

KLM Foods Penalty

KLM Foods Pty Ltd, which operates two United Petroleum outlets in Tasmania, was fined nearly $180,000 for underpaying four migrant workers by more than $20,000 over two months. The company also engaged in unlawful cashback schemes and issued false pay slips—actions deemed deliberate and exploitative by the Federal Circuit and Family Court. This case reinforces the importance of accurate wage payments and proper record-keeping.

Case Study 2: Litigation Against Hair Salon for Alleged Underpayment

Hair and Co Litigation

In another significant development, Hair and Co in Melbourne is facing legal action for allegedly underpaying two workers by more than $16,000. The FWO’s litigation also claims that the business failed to provide pay slips and ignored compliance notices. Non-compliance consequences are clear: small businesses must take employment obligations seriously.

Case Study 3: Handyman Business Faces Court for Non-Payment

Kam The Handyman Litigation

The FWO has also initiated legal proceedings against Kam The Handyman and Landscapes, which allegedly failed to pay two employees nearly $12,000. With the director facing individual penalties, this case underscores the risk business owners face when failing to meet wage and entitlements obligations.

Case Study 4: Security Services Company Penalised for Wage Breaches

Agile Security Penalty

Agile Security Force Pty Ltd, a Melbourne-based security company, was penalised more than $60,000 for underpaying workers and failing to maintain accurate records. This highlights the importance of correct payroll practices and detailed employee records.

New Regulations That Small Businesses Must Address

In addition to enforcement actions, small businesses must also adapt to new Fair Work regulations that impact their operations.

Criminalisation of Wage Theft

As of 1 January 2025, deliberate underpayment of workers has been criminalised. Businesses guilty of intentional wage theft can face up to 10 years in prison and fines of up to $7.5 million. This reinforces the need for businesses to maintain precise payroll systems.

The Right to Disconnect Law

The newly introduced right-to-disconnect law protects employees from being required to respond to work-related communications outside their normal hours. While aimed at promoting work-life balance, this law requires small businesses to reassess their communication practices to avoid legal disputes.

Best Practices for Small Business Compliance

With the increasing risks associated with non-compliance, small businesses must take proactive steps to meet their obligations. Here are some key strategies to avoid legal and financial penalties:

  • Understand Your Legal Responsibilities: Stay updated on the Fair Work Act and new regulations affecting your business.
  • Maintain Accurate Records: Ensure payroll, timesheets, and entitlements are correctly documented.
  • Classify Employees Correctly: Misclassification of workers as contractors when they are legally employees can lead to severe penalties.
  • Conduct Regular Payroll Audits: Reviewing payroll systems can help identify underpayments before they become legal issues.
  • Educate Your Employees: Inform staff about their rights and ensure management understands their obligations.

Resources to Support Compliance

To assist small businesses in maintaining compliance, SBAAS offers valuable resources, including:

 

Fair Work compliance is more critical than ever for Australian small businesses. With rising penalties and new regulations, failing to meet legal obligations can have severe consequences. However, small businesses can navigate compliance confidently by staying informed, implementing best practices, and utilising available resources.

For expert guidance tailored to your business, book a consultation with SBAAS today. Our experienced consultants can help you understand your Fair Work obligations and implement compliance strategies. Learn more about our services on our About Us page.

Other cases:

  1. Echuca Kebabs Litigation
  2. Relationships Australia QLD Enforceable Undertaking
Picture of Eric Allgood

Eric Allgood

Eric Allgood is the Managing Director of SBAAS and brings over two decades of experience in corporate guidance, with a focus on governance and risk, crisis management, industrial relations, and sustainability.

He founded SBAAS in 2019 to extend his corporate strategies to small businesses, quickly becoming a vital support. His background in IR, governance and risk management, combined with his crisis management skills, has enabled businesses to navigate challenges effectively.

Eric’s commitment to sustainability shapes his approach to fostering inclusive and ethical practices within organisations. His strategic acumen and dedication to sustainable growth have positioned SBAAS as a leader in supporting small businesses through integrity and resilience.

Qualifications:

  • Master of Business Law
  • MBA (USA)
  • Graduate Certificate of Business Administration
  • Graduate Certificate of Training and Development
  • Diploma of Psychology (University of Warwickshire)
  • Bachelor of Applied Management

Memberships:

  • Small Business Association of Australia –
    International Think Tank Member and Sponsor
  • Australian Institute of Company Directors – MAICD
  • Institute of Community Directors Australia – ICDA
  • Australian Human Resource Institute – CAHRI
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