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Something quite remarkable happened on 30 December 2013. While most of us were on holidays, the Minister responsible for employment laws, The Hon Eric Abetz, issued a press release announcing small businesses which rely on advice from the Fair Work Ombudsman (FWO) would not be prosecuted if the advice later turned out to be wrong.

“Wow – that’s great news” thought many employers, particularly those frustrated after having received different answers to precisely the same question after contacting the FWO’s often-criticised ‘Fair Work Infoline’. But this is, unfortunately, a Clayton’s immunity – the immunity you have when you’re not really having an immunity. Let me explain (and please accept my apologies in advance – this doesn’t end well for employers).

Let’s say this afternoon you call the Fair Work Infoline to find out how much you need to pay Steve, your new administrative assistant. And let’s say that, after going through all the necessary questions about Steve, his role and your business, the Infoline consultant confirms his wage is $20 per hour. Now let’s go forward in time to 2019. Steve is about to leave your business after a long and happy period of employment, but while checking on his final benefits he discovers he was in fact entitled to $22 per hour way back in 2014. 

Worst still, he also discovers that your subsequent indexation of his wage each year in line with the Fair Work Commission’s rulings mean he has been underpaid for more than 5 years!

So Steve decides to talk with you about it and, naturally enough, you’re not worried because you paid him exactly what you were told to pay when you called the Infoline. So you’re completely protected right? Wrong. 

While it’s true the FWO’s prosecution guidelines were recently updated (quite sensibly I might add) to confirm the Agency won’t seek penalties against an employer who has followed the Agency’s own incorrect advice, you’d still need to backpay Steve as his pay is a statutory entitlement. Based on a 38 hour working week over 5 years at $2 an hour, that comes to almost $20,000.

Unfortunately, many employers – and even some employer groups – have misunderstood the Minister’s recent announcement. They now think that, as long as they call the Infoline and get a reference number for their call, they are protected from any and all future claims relating to underpayments, application of the incorrect Modern Award, or whatever else they sought advice about. 

Those of us who support clearer advice for employers and a more responsive FWO would certainly welcome true immunity for employers who rely in good faith on the advice they receive. And we’d also like to see the protection from prosecution extended to include reliance on advice provided by other reputable, private-sector HR specialists, instead of just from the FWO itself.

So, while things appear to be moving in the right direction for employers, this Clayton’s immunity isn’t much to write home (or a press release) about.

Published: Thursday, February 06, 2014

Read article on Swtizer News

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