Full Transcript for Inside Employment & Safety (Australia): The shifting regulatory environment facing employers

really should be taking anyway. 00:04:58.319 --> 00:05:05.519 So in their um and some in this report by the ASAD AICD, they're sort of calling for reform in that area. 00:05:05.759 --> 00:05:12.959 And um uh they've noted that the other nations have these deregulation agendas, whereas they say we don't. 00:05:13.040 --> 00:05:18.879 But um I note that in the recent budget there is an item around um decreasing regulation here in the state. 00:05:19.199 --> 00:05:38.079 And it doesn't mean, like in a in an American or a Trump version, that you have to, you know, nuke nuke all of the regulation entirely, but just some elements could easily lend themselves to to to more sympathy in terms of the the the regulatory burden borne by by employers. 00:05:38.240 --> 00:05:42.319 I mean, I have who are some of the investigatory agencies you you'll be dealing with this week? 00:05:42.800 --> 00:05:49.759 Well, well, I mean, for a start, obviously the Fair Work Ombudsman is is the one that most of our clients and employers are dealing with on a regular basis. 00:05:49.920 --> 00:05:57.120 Steve, you uh work safe or safe work in the respective states obviously are the parallel in your jurisdiction. 00:05:57.279 --> 00:06:00.480 Um but then there are there are the state regulators as well. 00:06:00.639 --> 00:06:40.879 And in where we are in Victoria, the workplace inspector of Victoria, or equivalently for all of the states, which either have at least a monopoly over long service leave and in many respects over other cohorts of employees in those states, and then indirectly organizations, well, I should say Human Rights Commission, which we'll hear a bit more from you about uh from Lucy, with a expanded jurisdiction, and then peripherally through um through organizations like ASIC and APRA, our banking insurance clients, uh, Ostrack, in respect of um, you know, their their jurisdiction about anti-money laundering, um, and information commissioner. 00:06:41.120 --> 00:06:43.120 And we deal with those all of the time. 00:06:43.839 --> 00:07:09.439 And probably one key point is that we'd we'd all be aware that in in early 2019, uh Kenneth Hayne completed his Banking Royal Commission report into misconduct in that sector, and made a range of findings that the companies themselves were not appropriately managing and supervising, but was equally critical of the regulators and in particular of ASIC. 00:07:09.920 --> 00:07:12.000 And that was at the beginning of inactivity. 00:07:12.240 --> 00:07:20.240 For inactivity, failing to take appropriate, not enforcing uh uh uh appropriately or effectively, were his words. 00:07:20.399 --> 00:07:35.279 And what we then found, not not surprisingly, this correlation between those findings in that Royal Commission and an increased impetus by regulators and primarily the Fairwork Ombudsman. 00:07:35.439 --> 00:07:55.600 I'd be interested whether you saw a parallel increase in in effectiveness or activity from the safety regulator,

Steve, but certainly in the employment space, a significant, a noticeably significant uh increase in their activity and their use of the enforcement mechanisms, which we'll probably talk about separately shortly. 00:07:56.079 --> 00:08:07.439 I mean, statistically that's been borne out that the state safety regulators, particularly in Victoria, New South Wales, and Queensland have have doubled, if not tripled in some cases, their prosecution activity over the last five or ten years or so. 00:08:07.519 --> 00:08:13.199 These are criminal cases being taken out of the courts by those regulators alleging breach of health and safety laws. 00:08:13.279 --> 00:08:16.079 It's just a it's a much more heated environment that it has. 00:08:16.399 --> 00:08:35.200 Well, there's no, I mean, there's a high correlation between that time and the Banking Royal Commission report in February 2019, and then the increased emphasis on underpayment and uh wage theft or uh wage compliance and the enforcement mechanisms brought by uh the Fair Work Ombudsman. 00:08:35.440 --> 00:08:46.559 So it is all brought together this perfect storm of all of these regulators having very consistent powers and authority, and in some cases overlapping in respect to safety. 00:08:46.799 --> 00:08:54.960 I was just going to say, Tony, it's interesting that that this new increase in activity and the regulators are sort of working in parallel and overlapping in some cases. 00:08:55.039 --> 00:09:01.840 Um, for example, the safety regulators and the new Human Rights Commission, um, we see that happen there as well. 00:09:02.000 --> 00:09:07.679 So it it becomes really difficult for our client to manage competing but different demands from different regulators. 00:09:08.080 --> 00:09:14.080 Well, issues like bullying, uh, unsafe work environments, um, sexual harassment. 00:09:14.159 --> 00:09:30.639 Um, it's entirely possible now a client has to conduct an internal investigation, rightly, in relation to an allegation of harassment or sexual harassment, maybe subject to an external investigation from the safety regulator, maybe subject to a human rights commission series of inquiries, maybe subject to a fair work commission series of inquiries. 00:09:30.879 --> 00:09:36.240 I mean, that is sort of beyond the pale in terms of what might be an appropriate regulatory response. 00:09:36.639 --> 00:09:42.159 Lisa, you and I helped a client out with uh some investigation activities from the Human Rights Commission recently. 00:09:42.240 --> 00:09:57.120 And I and I suppose I wanted to share that with the audience because it speaks to a sort of a different posture entirely from that regulator into the investigation phase, but a bit more than that, into the sort of pursuit of what they view as compliance, a sort of an audit view, an audit function. 00:09:57.519 --> 00:09:57.919 That's right. 00:09:58.000 --> 00:10:03.200 We've seen, you know, a massive acceleration from the Human Rights Commission, and it's it's very new. 00:10:03.279 --> 00:10:09.360 Um, you know, there's only a handful of inquiries that are going on at the moment from the Human Rights Commission. 00:10:09.600 --> 00:10:13.360 Um we've also, you know, we've seen sort of a bit of activity. 00:10:13.440 --> 00:10:15.759 We've had a more formal inquiry. 00:10:15.919 --> 00:10:22.240 Uh, also, we've seen that they're taking action in terms of their focus sectors of retail and hospitality. 00:10:22.399 --> 00:10:28.799 And what we've seen there are some voluntary notices to produce documents with a range of questions. 00:10:28.879 --> 00:10:33.200 And I just thought worth sharing with our listeners because it is a very new development. 00:10:33.360 --> 00:10:36.000 It's their first sort of activity as a regulator. 00:10:36.080 --> 00:10:45.600 And the kinds of things that they're asking about may, although it's within their guideline document that they have, it may come as a surprise for some of our listeners. 00:10:45.759 --> 00:10:55.440 So there's a focus on having a written prevention and response plan with accountabilities for senior leaders in terms of the measures they have in place. 00:10:55.600 --> 00:11:07.039 So what they're really wanting to see is a coordinated approach pulled together to respond to the positive duty spanning the different standards they have that they assess it by. 00:11:07.279 --> 00:11:22.399 And as you say, Steve, it's more of an audit approach with quite granular detail for each of those seven standards rather than a simple sort of request for documents and an overall holistic view of whether there's compliance. 00:11:22.799 --> 00:11:34.399 Because in essence, it's risk-based legislation, like safety always has been and like other aspects of employment law, sets a standard and then effectively requires an employer to identify how it reaches that standard itself, and it is tested against that standard. 00:11:34.480 --> 00:11:36.879 But what we saw was really quite different as you're describing. 00:11:36.960 --> 00:11:53.600 It was it was far more uh a description of what they thought was an appropriate response to the positive duty, and then a demand that evidence was given that they'd done it, and really kind of using that uh inquiry power as a sort of a push to a predetermined outcome, which I thought was really um That's absolutely right. 00:11:53.759 --> 00:11:54.960 So the what was the request? 00:11:55.039 --> 00:11:55.840 It was tens of the other. 00:11:56.320 --> 00:12:00.000 The request was, you know, 80 pages long with a detailed analysis. 00:12:00.159 --> 00:12:02.720 Over, you know, over 400 documents were produced. 00:12:02.879 --> 00:12:18.559 There's a detailed analysis of and and the kind of um the issues that they brought up um again are quite uh seems to be a very high watermark for the kind of actions that um employers should be taking to respond to the positive duty. 00:12:18.960 --> 00:12:21.840 Do you do you think

they're overreaching though in in that case? 00:12:22.159 --> 00:12:24.080 Were they really asking too much? 00:12:25.279 --> 00:12:27.120 The standard is very high. 00:12:27.279 --> 00:12:33.120 I think if um we looked at some of the um uh you know elements that they were asking for. 00:12:33.279 --> 00:12:39.120 For example, there's a big focus on senior leaders, which I think we see across regulators and which is understandable. 00:12:39.200 --> 00:12:40.879 That's how you drive change. 00:12:41.039 --> 00:13:26.799 But when you look at some of the granularity of the requirements and the expectations, it's things like having um identified in the KPIs or in their incentive plans or in their contracts, even a requirement for a senior leader to be managing the positive duty compliance and and not just you know managing in terms of um, you know, having a KPI that relates to values or people, which is commonplace, uh, specifically in relation to the positive duty, which it which is quite interesting because it's placing that, as the Human Rights Commission should do, because it's their jurisdiction, but if you take a broader view, it's placing compliance with the positive duty and and preventing sexual harassment above other um harms like bullying or or or or other matters that they need to be taken care of. 00:13:27.200 --> 00:13:38.240 There's the risk of single focus regulatory agencies popping up one after the other, and as you observe, Tony, we hardly ever get rid of one, so they accumulate and they've got a singular focus, and that's that's their mission, that's their purpose. 00:13:38.399 --> 00:13:41.039 But when you're a hammer, the word looks like a nail, and that's uh that's the thing. 00:13:41.200 --> 00:13:42.240 And you've got to engage with them. 00:13:42.799 --> 00:13:49.200 Because if you don't engage them, they they as a regulator they have got the ability to investigate and to prosecute. 00:13:49.360 --> 00:13:49.600 Yeah. 00:13:49.759 --> 00:14:02.720 And if you if you you know you don't have a choice of, or your client does not have a choice of of cooperating, they either if they don't cooperate, they'll they'll be they'll be prosecuted for that and failing to comply with the notice to produce. 00:14:02.879 --> 00:14:08.799 And similarly, if the content is inadequate, then there's every risk of a prosecution in the court. 00:14:09.120 --> 00:14:09.360 That's right. 00:14:09.600 --> 00:14:28.799 And and and to touching on the content point, the to to sort of demonstrate their um granularity of approach, there, you know, they'll look at the content of policies, of um procedures, of your training, and and you know, to the extent that um there's particular focus on the other behaviours which are prohibited by the positive duty. 00:14:28.960 --> 00:14:34.399 So, you know, there's sexual harassment, obviously, as the primary one, but then there's sex-based harassment, hostile workplaces. 00:14:34.559 --> 00:14:43.279 You know, if your policies aren't specifically calling those out, or if it's not called out in your training, that is something that um the Human Rights Commission are likely to pick up on. 00:14:43.919 --> 00:14:52.159 I think we wanted to show that because that is really a real acceleration of the uh regulatory risk profile than it had been previously. 00:14:52.320 --> 00:15:02.960 Um, and and that level of granularity and the reference to the standards and expectations that each element of the standards can be demonstrated is is really different than it would have been, you know, uh a short number of months ago, even. 00:15:03.120 --> 00:15:15.840 So one one thing I observed from the safety regulator is the focus, and you've you've raised this too, Lisi, across all of our areas of regulation, the sort of singular focus almost on directors as being decision makers and culture setters for organizations. 00:15:15.919 --> 00:15:17.600 That's true, of course, in principle. 00:15:17.919 --> 00:15:30.879 But what I do see is uh requests for information pushing particular views as to what director level of activity ought look like, including very large organizations where directors are performing much more of a governance function than an operational function. 00:15:31.039 --> 00:15:37.279 We had a request for information directed at a client recently that said, How often are the directors speaking to the management? 00:15:37.440 --> 00:15:39.759 How often are they attending the workplaces? 00:15:40.000 --> 00:15:48.559 So not just asking curious questions for the purpose of uh assessing compliance, but actually setting an agenda of what they think the director activity would look like. 00:15:48.879 --> 00:15:52.559 But Steve, they're asking questions, and I'm seeing this from the Fair Work Ombudsman as well. 00:15:52.720 --> 00:15:59.840 They're asking questions that go to their prosecutorial decisions, and also things that would ultimately go to penalty. 00:15:59.919 --> 00:16:00.080 Yeah. 00:16:00.240 --> 00:16:03.519 Uh, you know, how how seriously have you taken the issue? 00:16:03.679 --> 00:16:29.120 But the questions you've raised, and in in terms of the uh the Fairwork Ombudsman, and most of our experience is in relation to to either prosecutions or investigations of wage compliance, that the notices to produce that we're receiving, and and the powers, by the way, for notice to produce are almost identical across the ASIC jurisdiction, the safety jurisdiction, the human rights commission jurisdiction, and so on. 00:16:29.279 --> 00:16:31.360 And they have vast powers. 00:16:31.600 --> 00:16:50.240 And what we're seeing is multitudes of questions, multiple, actually multiple notices to produce, by the way, uh, together with very specific and granular questions, in addition, by the way, to their powers to interrogate individuals, which is another putting that aside for a moment. 00:16:50.480 --> 00:16:56.480 And when they cast the net very widely, it causes

a whole lot of anxiety for a client. 00:16:56.960 --> 00:17:18.319 Because when when you look at the cost and time to collate records in the case of a typical flow notice to produce, that goes back ten years for all of your records, whether it's your board level records, your minutes, um, your uh emails, correspondence, uh advice, and so on. 00:17:18.640 --> 00:17:21.920 And that is literally millions of documents. 00:17:22.160 --> 00:17:31.279 And by experience, unfortunately, many hundreds of thousands of dollars of costs in terms of complying just with the notice to produce. 00:17:31.519 --> 00:17:34.160 Before you're almost a shadow penalty in its own way. 00:17:34.400 --> 00:17:36.000 It's almost almost a shadow penalty. 00:17:36.079 --> 00:17:43.359 Not that those costs are even all external to the organization, it's management time, it's resources in the IT department, it's the trawling through. 00:17:43.599 --> 00:17:49.440 You an employer's entitled to ask genuinely, is this material being reviewed as part of the investigation? 00:17:49.519 --> 00:17:50.960 And and the truth is it's not. 00:17:51.039 --> 00:17:57.599 The truth is that there's a haystack being sought for a needle to be searched for, and that's the the burden which sort of sits on employees. 00:17:57.839 --> 00:18:05.680 And I know part of what we do is uh uh helping our clients negotiate the terms of what those requests look like, so we get some sensible boundaries. 00:18:06.079 --> 00:18:14.720 Which annoys the hell out of me and my clients, Steve, because you know, when you go back to the flow, for instance, and say, look, it's too wide, can we bring that down? 00:18:14.880 --> 00:18:18.400 And invariably there is some negotiation on that. 00:18:18.559 --> 00:18:22.079 Well, why ask for it so wide in the first place? 00:18:22.319 --> 00:18:26.079 If you don't really need it, don't send us a 10-page letter. 00:18:26.799 --> 00:18:29.839 Give us one page of key documents and we can comply with that. 00:18:30.000 --> 00:18:34.079 Anyway, that's a bit of a grievance from But it's a genuine risk for clients. 00:18:34.240 --> 00:18:38.799 There have been prosecutions this this last few months in the health and safety context. 00:18:38.880 --> 00:18:43.200 Uh, a client who'd breached a substantive health and safety obligation was prosecuted for that. 00:18:43.359 --> 00:18:58.960 But separately, uh, Safe Work New South Wales prosecuted the business for failing to have complied with the investigatory notices in in our jurisdictions, Section 155 uh notices to produce and asserting that some of the answers were too cute, that not enough searches had been done. 00:18:59.200 --> 00:19:02.319 And the employer had uh probably a case-to-answer on some of this. 00:19:02.480 --> 00:19:07.440 Some of the answers seemed a bit cute to me, and and uh it seemed that some reasonable searches could have been done. 00:19:07.680 --> 00:19:14.720 But that was a second kind of layering up of offending, not just a substantive issue, not the matter that's being investigated, but non-compliance with the notice. 00:19:14.880 --> 00:19:17.920 So, you know, risk kind of multiplies pretty exponentially in this. 00:19:18.000 --> 00:19:25.519 And having a clear strategy and and having a view as to what's reasonable for us to do to comply with this notice, I think, is essential from the outset. 00:19:25.759 --> 00:19:26.720 But it's often not like that. 00:19:26.799 --> 00:19:29.440 You get the request in off your barrel looking for the materials. 00:19:29.519 --> 00:19:31.200 But I think a strategic positioning on this is important. 00:19:31.680 --> 00:19:47.759 We're in this in this cultural dilemma in dealing with these issues as well, because on the one hand, the regulator, after having read everything that Kenneth Haynes says in the um uh in the Royal Commission support report, then says, okay, well, we we weren't being rigorous enough. 00:19:47.839 --> 00:19:52.480 We need to involve, we need to be more uh, you know, to be a proper enforcer in the industry. 00:19:52.640 --> 00:19:53.759 And then they do that. 00:19:53.920 --> 00:20:11.759 And then on the other hand, we get decisions, a recent decision of Commissioner, uh, sorry, former Commissioner Johns, Judge Johns of the Um uh the Family Family and Federal Circuit Court, critical of the Fairwork Ombudsman for overzealously applying its prosecutorial powers in in a particular case. 00:20:12.160 --> 00:20:16.640 So the the I I understand that the regulator is under a lot of pressure as well. 00:20:16.799 --> 00:20:21.200 And even on a on a slightly different tact, but but similar concept. 00:20:21.519 --> 00:20:45.599 When we look at the um the proceedings in the supermarkets uh under payments proceedings and and the fact that there's uh a part-heard case before still, uh before Justice Perram of of the federal court, um, and the judge asked for further submissions and was critical of the parties for giving voluminous submissions because everyone's worried about the consequences. 00:20:45.759 --> 00:20:49.279 No one wants to take the risk of saying, oh, well, we'll give you five pages. 00:20:49.440 --> 00:20:56.240 And he was equally critical of the Fair Work Ombudsman as he was of the uh the employers for submitting detailed volumes. 00:20:56.400 --> 00:21:01.279 But of course you're going to do that because you want to protect your position as best you possibly can. 00:21:01.440 --> 00:21:14.240 And we're in this situation which is feeding itself is over high degree of regulation and enforcement and attempted compliance because no one wants to be prosecuted and no one wants to have a big penalty at the same time. 00:21:14.720 --> 00:21:17.119 And this is the challenge, the challenge of proportionality. 00:21:17.279 --> 00:21:23.839 You know, there are genuinely uh matters which need proper external investigation and there are matters that need investigation and prosecution.

00:21:23.920 --> 00:21:34.720 But the question of, as you say, that sort of snowballing of uh corporate response regulatory, uh um uh additional powers, additional activity, additional prosecutions, one feeds the other. 00:21:34.960 --> 00:21:36.319 I mean Lucy, what are you telling clients? 00:21:36.400 --> 00:21:38.559 What's your sort of takeaway point on all of this? 00:21:38.960 --> 00:21:45.759 I I think the key takeaway point is, you know, for a while there was no activity from the human rights um commission at all. 00:21:45.920 --> 00:21:51.440 So the the key takeaway is there is now, so uh it it's not a sleeping issue. 00:21:51.839 --> 00:22:06.720 Um the the key takeaway is have your house in order, so ensure you have the appropriate governance and reporting in place and that you have measures in place to um prevent the uh prevent sexual harassment across those seven standards. 00:22:07.039 --> 00:22:21.759 Um I think the key lever um is making sure that there's buy-in from the directors and the senior leadership to drive that investment and um have that uh have that in place so if um the AHRC comes knocking, you have a clear response. 00:22:22.240 --> 00:22:24.000 Yeah, Tony, what's your what's your thing? 00:22:24.400 --> 00:22:25.680 I mean, put your systems in place. 00:22:25.920 --> 00:22:41.039 I mean that's and and and there's no excuses in many senses for employees either not to have proper safety systems in place, compliance systems, wage um uh uh systems in place, uh sexual harassment systems in place, and rather the positive duty. 00:22:41.200 --> 00:22:47.440 But secondly, look, as uh through through gritted teeth, you have to cooperate with the with the regulator. 00:22:47.599 --> 00:22:55.200 You want to maintain a useful, productive relationship with them, but you also don't need to roll over either. 00:22:55.359 --> 00:23:05.200 You need to know when to push back and to negotiate something more effectively because sometimes they do need to be reminded that their powers are being overzealously enforced. 00:23:05.519 --> 00:23:05.680 Yeah. 00:23:06.160 --> 00:23:12.559 Look, my my key message from all of this is for our clients it feels like the external pressure is greater. 00:23:12.799 --> 00:23:24.720 And I think, you know, Lisa, you've shown us, and we've heard some examples here, that that that is that is true, you know, to express empathy for that from uh the duty holder side, from the employer side, I I think that the temperature is much, much higher than it has been. 00:23:24.960 --> 00:23:34.480 And the external pressure and the external scrutiny that any Australian employer might find themselves under, any Australian board or executive team, is really different today than it would have been 10 years ago. 00:23:34.640 --> 00:23:41.279 And so, you know, the messages about having clarity about what the systems and the governance are, about what the evidence would be of demonstrating compliance. 00:23:41.359 --> 00:23:42.799 I think those are really important questions. 00:23:43.119 --> 00:23:54.559 But there's also an element here of just acknowledging that most organizations will need to be to some degree match fit on the process of proving that they've done the right thing, about extracting the right materials and extracting the right records. 00:23:54.640 --> 00:24:03.039 And again, investment in IT systems and investment in those sort of platforms that probably was not the greatest priority 10 years ago, but I I sort of think it has to be. 00:24:03.200 --> 00:24:04.000 It has to be bad. 00:24:04.480 --> 00:24:13.680 And we're not saying that they're you know, we're we're acknowledging the level of regulation, but we're not saying it's a bad thing, particularly for the human rights regul um new regulatory body. 00:24:13.759 --> 00:24:19.839 I think it's great that they're they're taking action because it's driving change um to prevent sexual harassment. 00:24:20.000 --> 00:24:21.200 Like who's gonna argue with that? 00:24:21.519 --> 00:24:25.359 It's just it's it's an added pressure, it's a new regulator and there's overlap. 00:24:25.599 --> 00:24:30.079 So uh it's yeah, as you say, more important than ever to have the systems in place to respond. 00:24:30.480 --> 00:24:31.279 I couldn't agree more. 00:24:31.599 --> 00:24:33.279 Thank you, Lucy and thank you, Tony. 00:24:33.359 --> 00:24:43.039 We hope you enjoyed this collab between uh my kids told me that's the phrase to use, collab between Inside Safety and Inside Employment at HSF Chroma. 00:24:43.279 --> 00:24:44.240 We've really enjoyed your listening. 00:24:44.319 --> 00:24:49.680 Please feed us any comments back on any topics you'd like to hear any of our team discuss as part of these podcasts. 00:24:49.759 --> 00:24:53.440 And otherwise, please follow the podcast and we look forward to seeing you next time.