Australian small-to-medium-sized businesses are increasingly seeking tailored industrial relations (IR) advice.
According to the Fair Work Ombudsman (FWO), there’s been a significant jump in custom IR advice requests. Its Employer Advisory Service (EAS) handled more than 3,100 such requests in 2023-2024 – a 15% increase from the previous year.
The rise highlights that SMEs are seeking support to navigate workplace laws and avoid unintentional breaches. Such employers want clear, practical guidance to:
- Manage their compliance responsibilities
- Protect their operations
- Prevent costly violations, and
- Avoid costly penalties down the track
What are the compliance challenges for SMEs?
Australia’s IR landscape is complex, so it can be difficult to keep up to date with the required standards. Typically, big businesses have dedicated HR teams, while smaller operations often lack staff with expertise in award regulations, payroll standards, and record-keeping requirements. Just since mid-2022, changes have included updates to the Respect@Work Act, Psychosocial Hazards (People at Work), Domestic Family and Violence Leave, and the end of Pay Secrecy clauses.
Expect more regulations and compliance demands to grow. For example, wage theft is set to be criminalised next year, adding a new layer of legal risk for business owners. Your business must find the resources to keep abreast of these changes and maintain accurate records.
As your broker or adviser, we understand these pressures and can help you find insurance options that offer financial protection for workplace disputes or compliance breaches.
Support Offered by the Employer Advisory Service (EAS)
For those seeking guidance, the free FWO’s Employer Advisory Service (EAS) offers a customised advice topics including:
- The National Employment Standards (NES)
- Award provisions, such as coverage and classification
- Pay, and entitlements
- Record keeping, and pay slips
- Termination and redundancy
- Flexible working arrangement
- Record-keeping obligations, among others.
Newer employers, in particular, are benefiting from this support, as it helps them establish compliant practices right from day one.
This support can be invaluable for business owners looking to avoid unintentional wage theft or employee misclassification. By accessing reliable advice through EAS, small business owners can feel confident they are:
- Running fair and compliant work environments
- Reducing their risks, and
- Boosting their workplace practices.
FWO’s Digital Resources and Tools
For those who prefer self-service, the FWO offers the Small Business Showcase. It’s an online hub packed with digital tools and resources. There, you’ll find information on common compliance issues for SMEs and tools to simplify the regulatory maze.
Having easy access to digital resources can help SMEs tackle compliance questions independently. It’s your go-to website to clarify award rates or check record-keeping requirements, and other employer obligations.
Financial and Legal Risks of Non-Compliance
Not meeting IR standards carries significant financial and reputational risks, such as:
- Fines and penalties
- Back payments
- Legal costs
- Damages (for instance, where employees seek damages in civil claims for breaches, which adds to costs)
- Brand damage and loss of customer trust from negative publicity
- Employee morale, retention and attraction issues
- Increased regulatory scrutiny
- Industrial action
- Union involvement, and
- Loss of contracts.
Consider these recent cases. The Federal Court fined dumpling chain Din Tai Fung and two of its senior managers $4M+ for a fraudulent scheme underpaying its workers. Meanwhile, a Sydney health and wellness research company was fined $197,000 by the Federal Court for engaging in sham contracting against disabled workers. They misclassified those staff as independent contractors and did not pay their wages in full.
Protecting Against Compliance Risks with Insurance
With compliance risks on the rise, Management Liability Insurance has become a valuable investment for small businesses. Management Liability can cover legal fees and settlements related to workplace disputes, such as wage claims, employment misclassification, and compliance violations.
As your broker or adviser, we can customise Management Liability options to your business needs. Our aim is to provide peace of mind against potential financial issues arising from IR disputes.
As well, we can investigate comprehensive coverage options to deal with the unique risks that arise from regulatory changes.
By combining up-to-date compliance advice with insurance coverage options like Management Liability, you can focus on what you do best – running your business with confidence. Just as Fair Work’s EAS offers bespoke advice, we do too as your broker or adviser.