FWO to focus on the agricultural industry

Borders are open and the return of migrant working holiday visa travelers to Australia may be on the horizon. These workers fill workforce gaps for industries such as agriculture, hospitality and contract cleaning. However, these industries, which have traditionally relied on seasonal, casual and migrant workers or labour hire companies, have historically experienced exploitation and mistreatment.

In recognition of this, the Fair Work Ombudsman’s (FWO) priority sectors in 2022/23 include sham contracting, contract cleaning and expanded its focus on the horticulture industry to the entire agriculture sector.

There are several features of the agriculture sector that place workers at greater risk of underpayment and exploitation, namely the nature of the workforce:

• There is a high concentration of transient workers, particularly visa holders and other migrant workers. These workers often lack English fluency, may be unaware of their rights, have little to no support network in Australia and are likely to experience financial insecurity.

• Traditionally, it was common within the industry to operate on a piecework rate¹ rather than an hourly rate, which is susceptible to manipulation and exploitation, particularly if record-keeping is poor.

To combat the risk of wage theft and underpayment in the horticulture industry, the Fair Work Commission made changes to the Horticulture Award effective April 2022 requiring a minimum wage guarantee and record keeping requirements for pieceworkers. The FWO has issued dozens of infringement notices to employers in the agricultural industry who have breached payslip and record keeping laws, citing that “record-keeping is the bedrock of compliance … employers who fail to meet these obligations are more likely to be underpaying, whether intentionally or not.”

The FWO’s continued investigations and enforcement actions show that employers across all industries must ensure that they have met and continue to meet their payroll obligations to their employees. It is essential that the board and management understand the risks and take steps to mitigate the occurrence of wage underpayment and theft, particularly where an employer’s business is part of a complex supply chain. The critical issues board and management need to understand are:

• Understanding the breadth and depth of the payroll regulations (including the Fair Work Act) that apply to businesses.

• Ensuring documentation is in place to demonstrate the terms of employment for the workforce (i.e. casual, part time, contractor etc.), no matter how transient the workers may be.

• Ensuring the systems are in place to capture the actual work hours worked for each employee; the relevant data on “pieces” for your piece rate workers.

• Review the relevant industrial instruments that apply to the workforce.

It is not enough to just have your own “house in order” in relation to the payment of employee entitlements to not fall foul of sham contracting and accessorial liability provisions of the Fair Work Act, entities need to also look at their suppliers’ practices. If non-compliance is identified further down the line in your supply chain, entities can face an examination from regulators, such as the FWO, as to whether you deliberately turned a blind eye to your suppliers’ breaches of the Fair Work Act for your own benefit, and if so, then you may face penalties along with the errant employer.

[1] Under a piecework rate arrangement, a worker is paid according to the amount they have picked, packed, pruned, or made.