Case Study: Investigation uncovers mistake about security worker entitlements

A recent matter in the security industry has reinforced the need for providers to ensure they are paying their workers according to the correct industrial instrument, such as the correct award or enterprise agreements.

Historical change of ownership causes confusion

Upon reviewing a security business’s application for a labour hire licence, the Labour Hire Authority (LHA) discovered that the business had been applying a collective agreement from 2006 made under old industrial relations legislation to its workforce.

The employer named in the old collective agreement was a different legal entity to the business that applied for a labour hire licence.

Collective agreements can transfer to new employers and their employees in some circumstances. However, in this case, the collective agreement had not transferred (or if it had, it would have only transferred for a maximum period of 12 months).

This meant that the applicant was not entitled to apply the 2006 collective agreement to its workforce.

Because of this error, the applicant may have underpaid its workforce for some time. The applicant was cooperative with the LHA’s investigation and demonstrated that their error was the result of a genuine misunderstanding of the correct position and relying on poor advice, rather than a deliberate flouting of the law.

How are these situations handled?

In these circumstances, LHA will generally allow providers the opportunity to rectify the non-compliance rather than taking firmer compliance action such as refusal or cancellation. This is likely to include addressing underpayment of workers’ wages.

The LHA reminds all labour hire providers that they must ensure they are paying their workers according to the correct industrial instrument. You can find out more about employee entitlements on the Fair Work Ombudsman website.