Fair Trades Outcomes from the Fair Work Ombudsman’s National Apprenticeship Campaign 2015

Table of Contents

Infographic ...... 3

About the campaign ...... 4

Outcomes at a Glance ...... 5

Industries Profiles ...... 5

Stakeholders ...... 6

Communication and Public Awareness ...... 6

Other media ...... 8

National Findings ...... 9

Individual errors ...... 11

Enforcement Outcomes ...... 13

Association membership and business size ...... 14

Conclusion ...... 14

About the Fair Work Ombudsman ...... 15

Appendix A – Stakeholders ...... 17

Appendix B – Industry Breakdown ...... 18

Industry Compliance Rates ...... 18

Appendix C – State Findings ...... 19

Appendix D – National Apprenticeship Campaign 2015 and National Building and Construction Campaign 2014/2015 ...... 20

Page 2 of 20

Infographic

Page 3 of 20 About the campaign

The Fair Work Ombudsman (FWO) developed the National Apprenticeship Campaign (the campaign) to test and detect non-compliance with workplace laws for apprentices in Australia.

Around 60% of apprenticeships are cancelled or withdrawn within the first year, with reasons relating to the employment experience the most commonly cited grounds for non- completion. Specifically 33% of apprentices left their training arrangements due to relationship issues with their employer, poor working conditions or not being happy with the on-the-job training*. The FWO believes that early intervention through advice and assistance gives employers and their apprentices the best opportunity of a completed apprenticeship.

Other factors considered in the development of the campaign included:

 From 1 July 2014 to 30 June 2016, the FWO received 2241 Requests for Assistance from apprentices and trainees  64% of apprentices and trainees who made these Requests for Assistance were under the age of 24  42,073 enquiries were made to the Fair Work Infoline in relation to apprentices and trainees between 1 July 2014 and 30 June 2016. The campaign focused on businesses engaging apprentices, with an emphasis on businesses that engaged first year apprentices. Businesses were selected for inclusion in the campaign based primarily upon industries where the most Requests for Assistance were received by the FWO, including:

 Retail Services  Manufacturing  Electrical Services  Automotive – Maintenance and Repair  Hair and Beauty.

The FWO worked closely with the Department of Education in designing and developing the campaign. Department of Education data was vital in complementing the FWO’s internal data, ensuring the FWO could select the most appropriate businesses for inclusion in the campaign.

All businesses audited in the campaign employed apprentices. The FWO audited the Understanding the Non-Completion of Apprentices - National Centre for Vocational Education and Researchcompliance of 822 businesses that employed 2266 apprentices. Compliance was assessed with the Fair Work Act 2009 (the Act), the Fair Work Regulations 2009 (the Regulations) and the relevant award/agreement.

*Understanding the Non-Completion of Apprentices - National Centre for Vocational Education and Research

Page 4 of 20 Outcomes at a glance

 Entitlements of 2266 apprentices checked, including

o 1325 first year apprentices; and o 941 non-first year apprentices (second or subsequent years).  822 business that employed apprentices audited  644 (78%) businesses were compliant with record-keeping and pay slip requirements for their apprentices  558 (68%) businesses were paying their apprentices correctly  443 (54%) businesses were compliant with all requirements for their apprentices  $339 433 was recovered on behalf of 323 apprentices  54 formal cautions, seven (7) Compliance Notices and five (5) Infringement Notices were issued.

Industries profiles

The campaign focused on industries where the FWO received a higher proportion of Requests for Assistance. From July 2013 to 31 May 2014 for example, the breakdown of total apprentice based Requests for Assistance received by the FWO was:

 Construction: 523 (37.41%)  Hair and Beauty: 234 (16.74%)  Hospitality: 158 (11.30%)  Manufacturing: 144 (10.30%)  Automotive: 132 (9.44%)  Electrical Services: 114 (8.15%).

This campaign did not audit Construction and Hospitality businesses because of recent audit activity in those industries. A summary of comparative findings in relation to apprentices in the Construction industry is provided in Appendix D.

Based on the above industries the campaign focused on employers with apprentices undertaking the following apprenticeships:

 Automotive (e.g. mechanics, panel beaters, auto electricians)  Electrical Services (e.g. electricians, equipment technicians)  Manufacturing (e.g. welders, boilermakers, fitter/turners, cabinet makers shopfitters,)  Hair and Beauty (e.g. hairdressers)  Retail Service Industry (e.g. bakers, pastry cooks, retail butchers).

Page 5 of 20 Stakeholders

The FWO engaged with government and industry stakeholders on the design, development and delivery of the campaign and to obtain insights into specific issues relating to apprentices and apprenticeships. This also provided the chance to explore future opportunities to work collaboratively in addressing issues around apprenticeships.

The stakeholders included (but were not limited to):

 Commonwealth Department of Employment  Commonwealth Department of Education  Victorian Qualification and Registration Authority  Master Electricians Australia (MEA)  Motor Trades Association of Australia (MTAA)  Australian Meat Industry Council (AMIC)  Sheet Metal Industry Association (SMIA)  Australian Workers Union (AWU)  Australian Manufacturers Workers Union (AMWU)  United Voice (UV).

A full list of stakeholders is available in Appendix A.

Communication and public awareness

The campaign included a communication and public awareness phase. This aimed to promote awareness of the rights and responsibilities regarding workplace laws among first year apprentices and their employers. A dedicated web page was created on the FWO website at www.fairwork.gov.au/apprentices (which attracted 6353 visits).

Presentations

During May and June 2015, the Department of Education conducted eight training sessions for Apprenticeship Providers in every state and territory. As part of this training, Fair Work Inspectors (FWI’s) conducted presentations on the tools and resources the FWO provides for apprentices and their employers. Current issues regarding the employment of apprentices, such as competency based progression and tuition fees for apprentices were also discussed.

Social media

In June 2015, the FWO conducted a three-week social media campaign. It was developed to promote compliance among employers of first year apprentices and their apprentices in the manufacturing, automotive and electrical service industries. The communication activities were aimed at ensuring employers and their apprentices were aware of their rights and obligations.

Page 6 of 20 Outcomes of the social media campaign included:

 6353 visits to the campaign page at www.fairwork.gov.au  FWO content was seen by 774 704 people on Facebook  Twitter delivered 387 574 impressions leading to 2217 clicks and 5190 engagements (retweets, shares, favourites etc.).

Sample Facebook posts

Sample Twitter posts

Page 7 of 20 Sample postcard collateral

Other media

The campaign also achieved coverage in print, radio and online media as per the following table:

Print

The Age Sydney Morning Herald Swan Hill Guardian

Radio

ABC Southern Queensland ABC South East NSW 105.7 ABC Darwin

ABC Sunshine Coast 702 ABC Sydney 891 ABC Adelaide

ABC Tropical North ABC Central Coast Radio National

ABC Western Queensland ABC South East NSW ABC Broken Hill

ABC Wide Bay 612 ABC Brisbane ABC Far North

ABC North Queensland ABC Capricornia ABC Gold Coast

ABC North West Qld Online

Hospitality Magazine WA Today Business The Age Business

Business Day - The Canberra Medianet WAtoday.com.au times

Brisbane Times Business Financial Review The Age

Brisbane Times

Page 8 of 20

National findings

During the campaign, the entitlements of 2266 apprentices were checked. These apprentices were employed by 822 businesses that were audited, including:

 214 businesses that only employed first year apprentices  307 businesses that only employed non-first year apprentices  301 businesses that employed both first year and non-first year apprentices.

Figure 1 shows that apprentices that worked for a business with only first-year apprentices were less likely to have issues with their pay and records than apprentices working for businesses without first year apprentices. Apprentices that worked for a business with both first and non-first year apprentices were even less likely to have errors for their pay and employment records.

Figure 1: Compliance by apprenticeship levels

65% 63% 61% 61% 59% 57% 54% 55% 53% 51% 48% 49% 47% 45% Only First Year Only Non-First Year Both Apprentices Apprentices

The more apprentices a business employs, the less likely the apprentice is to have issues with their pay and employment records. Figure 2 shows that compliance rates for businesses increases with the number of apprentices employed.

Figure 2: Compliance by number of apprentices per business

Page 9 of 20 This is consistent with compliance rates by the number of employees (all employees, not just apprentices) as per Figure 3. The more employees a business has, the less likely an apprentice will have errors with their pay or records.

Figure 3: Compliance by business size

Compliance Rates by Business Size 80% 75% 72% 70% 65% 61% 60% 54% 55% 50% 45% 40% 40% 35% 30% 1 to 4 5 to 14 15 to 49 50 or more Number of Employees

Of the 822 businesses that employed apprentices:

 443 (54%) were compliant with all requirements for their apprentices  378 (46%) had at least one error:

o 201 (24%) had errors relating to apprentice pay rates o 115 (14%) had errors relating to apprentice pay slips or record-keeping o 62 (8%) had both pay rate and records/pay slip errors.

Figure 4: Compliance rates

Page 10 of 20 This means that:

 644 (78%) businesses were compliant with their apprentice record-keeping and pay slip requirements  558 (68%) were paying their apprentices correctly  $339 433 was recovered on behalf of 323 apprentices, with an average recovery of $1050.87 per apprentice  54 formal cautions, seven (7) Compliance Notices and five (5) Infringement Notices (on the spot fines) were issued.

Findings from the National Building and Construction Industry Campaign 2014/2015 show a higher overall compliance rate for businesses engaging apprentices compared to results from the National Apprenticeship Campaign 2015 as per Figure 3. This is consistent with the higher overall compliance rates identified across all Building and Construction Industry businesses (including those without apprentices).

Figure 5: Apprenticeship compliance rates in the Building and Construction Industry Campaign

Individual errors

The 378 businesses with errors had a total of 520 individual errors (see Figure 6). The largest proportion of errors related to monetary entitlements (65%), with over a third (38%) relating to wages. Pay slip errors accounted for 32%, followed by overtime (16%) and penalty rates (7%). Allowances, including apprentice tool and industry allowance accounted for 4% of the errors. The other errors identified included unauthorised deductions, minimum engagements and leave loading.

Page 11 of 20 Figure 6: Individual error types

Individual Error Types

1%

4%

16% Wages

38% Penalty Rates 2% Pay slips Record Keeping Overtime Allowances Other 32% 7%

Case study

The FWO audited a motor vehicle servicing centre in regional New South Wales as part of the campaign. The business employed one first year, and one third year apprentice motor mechanic.

FWI’s assessed the employment records of the apprentices, and found that the third year apprentice was being paid correctly and receiving all the required entitlements for an apprentice under the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (the Award). However FWI’s discovered the first year apprentice was receiving a base hourly rate of $9.36, instead of the correct rate of $9.82.

The owner of the business advised he had checked the rates some time ago, but had not used the most current rate (which had increased the previous July in line with the Annual Wage Review). FWI’s assisted the owner to use the correct rates to calculate the amount the apprentice had been underpaid due to the incorrect rate. In total the apprentice was underpaid $502, which the owner immediately paid to the apprentice. The owner also ensured the apprentice was being paid the correct rates and receiving all the correct entitlements moving forward.

FWI’s provided assistance to the business owner on the tools the FWO has available to determine apprentice rates of pay, and ensure they are receiving all of their correct entitlements. This included registering for the FWO My Account service, which provides updates and reminders for issues including rate changes as a result of the yearly Annual Wage Review. The business will also be considered for inclusion in the FWO’s National Compliance Monitoring Campaign.

Page 12 of 20 Enforcement outcomes

Formal cautions were issued to 54 businesses that employed apprentices. Formal cautions are a written warning when the FWO has found non-compliance and wants to put a business on notice that future non-compliance could result in the FWO seeking financial penalties. If the FWO becomes aware of any further instances of non-compliance, the fact the business was issued with a formal caution will be a factor taken into account in deciding whether to commence civil proceedings against the business and may be used as evidence in any penalty determinations.

Formal cautions were issued to businesses employing apprentices across all the industries, with most being issued in the Electrical Services (15), Automotive (7) and Manufacturing (7) industries.

Compliance Notices were issued to seven businesses in relation to their apprentices. A Compliance Notice is a written notice legally requiring a business to rectify contraventions of the Act. A total of $38 937.63 was back paid by seven businesses to 12 apprentices as a result of the Compliance Notices issued.

Case study

FWI’s audited a joinery and furniture construction business in Victoria as part of the campaign. The business has over 30 employees including three cabinet making apprentices. One of the apprentices was a first year, and the other two were second year apprentices.

FWI’s assessed the employment records of the apprentices, and found that two of the apprentices were working a 40 hours week with no overtime or rostered day off provided. The Timber Industry Award 2010 (the Award) provides for overtime to be paid for hours worked in excess of 38 ordinary hours worked per week for the apprentices of this business. FWI’s further determined that whilst all the apprentices were receiving the apprentice rates as specified in the Award, one of the apprentices commenced work with the business after he had turned 21 years of age. Under the Award, this apprentice is considered an adult apprentice and entitled to the higher adult apprentice rates specified in the Award. Further, FWI’s also identified that two of the apprentices were not receiving annual leave loading as is required by the Award.

FWI’s provided assistance to the business on the tools the FWO has available to determine rates of pay, and required the business to use those rates to calculate the underpayments to the apprentices from the issues that were identified in the records.

After completion of the assessment, it was determined that 2 of the apprentices had been underpaid just over $20,000. Given the significance of the underpayments, and that the underpaid employees were apprentices, the FWI issued a Compliance Notice to the business. The Compliance Notice required the business to repay the amount outstanding to the apprentices if full, and within 28 days. A failure to comply with a Compliance Notice can mean the FWO can commence legal action for not complying with the notice. That legal action can include the recovery of outstanding entitlements and the imposition of penalties.

The business paid the amounts outstanding in full to the two apprentices within the required timeframe and no further action was required under the Compliance Notice. The business was provided information and free tools the FWO has available to correctly calculate and ensure their apprentices are receiving their correct entitlements. The

Page 13 of 20 Five businesses were issued with an Infringement Notice for not keeping the correct records and/or pay slips for their apprentices. An Infringement Notice is a fine given to a business for non-compliance with record-keeping or pay slip requirements of the Act and Regulations. The total amount of fines issued through infringement notices during the campaign was $1620.

All businesses found to be non-compliant in the campaign will be re-audited as part of the FWO’s National Compliance Monitoring Campaign. If businesses continue to underpay their apprentices, or fail to keep the required apprentice records, the FWO will take further enforcement action including the taking of court action to have financial penalties imposed.

Association membership and business size

The campaign identified that 42% (349) of the 822 businesses audited were members of one or more industry or employer associations. Businesses that were members of an industry or employer association had a higher compliance rate than businesses that were unaffiliated. Association member businesses had a compliance rate of 60% compared with a compliance rate of 49% for non-member businesses (see Figure 7). This suggests the positive effect employer associations have on compliance rates through ongoing engagement and support to their members.

Results by Industry can be found at Appendix B.

Results by State/Territory can be found at Appendix C.

Figure 7: Compliance rate by Association membership

Conclusion

The results of the campaign reveal that most apprentices were being paid correctly, and most businesses were keeping the correct time and wage records for their apprentices. Issues were more likely to occur in smaller businesses, or businesses that employed fewer apprentices. It is also clear that businesses that were not members of employer associations were more likely to have errors with the pay or record keeping of their

Page 14 of 20 apprentices.

The FWO will work collaboratively with stakeholders across industries to educate and support businesses, as well as to ensure ongoing compliance following the release of this report. The FWO will continue to encourage businesses, particularly small businesses, to consider becoming association members as this report again reveals better levels of compliance amongst association member businesses. This also highlights the important role the FWO stakeholders continue to have in improving and promoting a culture of ongoing compliance.

The FWO will:

 Share results of this campaign with employers via My Account, social media and email subscriptions; and  Continue to educate employers of apprentices and apprentices, through media and communication activities.

The FWO views ongoing non-compliance to be of a serious nature. All businesses that were non-compliant in the campaign will be re-audited as part of the FWO’s ongoing National Compliance Monitoring Campaign. If further non-compliance is detected, the FWO will consider further enforcement action including seeking financial penalties through the courts.

The FWO will continue to support a culture of compliance by empowering employers and employees to resolve any issues that arise at a workplace level. To assist in achieving this, FWO has recently released a number of practical Guides to Resolving Workplace Issues, which can be accessed at www.fairwork.gov.au. Whilst the FWO will monitor non-compliant businesses, supporting employers and employees to resolve issues at this level provides the best opportunity to maintain productive workplace relationships.

About the Fair Work Ombudsman

The FWO is an independent agency created by the FW Act on 1 July 2009. Our main role is to promote harmonious, productive and cooperative workplace relations.

Each year the FWO runs proactive campaigns to assist employers and employees understand their rights and obligations under Commonwealth workplace relations laws.

These campaigns can focus on particular industries, regions and/or labour market issues and are conducted on a national and state level.

This report covers the background, method and findings of the National Apprenticeships Campaign 2015. For further information please contact the media team at [email protected].

Page 15 of 20 If you would like further information about FWO’s campaigns, please contact Lynda McAlary-Smith, Executive Director – Proactive Compliance and Education at [email protected].

Page 16 of 20 Appendix A – Stakeholders

Government Industry/Employer Employee Association Stakeholders Stakeholders Stakeholders

Cabinet Makers and Designers Australian Workers Union Department of Employment Association (CMDA). (AWU)

Motor Trades Association of Australian Taxation Office Electrical Trades Union (ETU) Australia (MTAA)

Australian Meat Industry Council Department of Education United Voice (UV) (AMIC)

Victorian Qualification and Australian Manufacturing Australian Institute of Building Registration Authority Workers Union (AMWU)

Skills SA (Department of Further Education, Employment, Communications, Electrical and Master Electricians Australia Science and Technology – Plumbing Union of Australia (MEA) Traineeship and Apprenticeship (CEPU) Services) WA Department of Training and Workforce Development Baking Association of Australia (Apprenticeship and Traineeship (BAA) Policy) NT Department of Employment, AMA Apprenticeship & Education and Training Traineeship Services (Western (Apprenticeships and Australia); Traineeship)

Skills Tasmania MTA Apprenticeships Plus

Department of Education, MTA NSW Employment & Training (Qld); ACT Department of Education Victorian Automobile Chamber of and Training Commerce (VACC)

MTA SA Inc.

MTAQ MTA WA MTA ACT MTA NT Inc. National Electrical and Communications Association (NECA)

Australian Welding Institute (AWI)

Sheet Metal Industry Association (SMIA) Australian Shop and Office Fitting Industry Association (ASOFIA)

Page 17 of 20 Appendix B – Industry breakdown

The Retail Services Industry had the highest compliance rate of 60%. The Automotive and Hair and Beauty Industries shared the lowest compliance rate with 45%.

Industry Compliance Rates 70% 60% 60% 50% 59% 59% 50% 40% 45% 45% 30% 20% 10% 0%

Industry compliance rates

Non - Most common Industry Compliant Amount recovered Compliant errors

Pay slips (39%) Retail Services 75 (60%) 49 (40%) $7,480 for 14 apprentices Base Rates (33%) Base rates (42%) Manufacturing 115 (59%) 79 (41%) $77,545 for 73 apprentices Pay slips (27%)

Electrical Base rates (40%) 79 (50%) 79 (50%) $90,818 for 90 apprentices Services Pay slips (25%) Base rates (42%) Automotive 64 (45%) 77 (55%) $40,721 for 41 apprentices Pay slips (35%) Pay slips (31%) Hair & Beauty 30 (45%) 37 (55%) $23,551 for 27 apprentices Penalty rates (27%)

Pay slips (31%) Other* 30 (45%) 37 (55%) $109,319 for 27 apprentices Penalty rates (27%)

*Whilst the campaign audited apprentices in the categories outlined in this report, some of those apprentices worked in industries outside of the 5 mentioned e.g. an apprentice motor mechanic who works for a business in the transport industry.

Page 18 of 20 Appendix C – State findings

The highest compliance rates were found in the Australian Capital Territory and Queensland, which both had a 68% compliance rate. The lowest compliance rate was New South Wales with 42%.

Compliance rates by States and Territories

State or Non - Most common Compliant Amount recovered Territory compliant errors

New South Base rates (40%) $121 612 for 162 110 (42%) 150 (58%) Wales Pay slips (31%) apprentices Base rates (38%) Victoria 99 (53%) 89 (47%) $78 991 for 55 apprentices Pay slips (32%)

Western Pay slips (29%) 68 (61%) 43 (39%) $75 443 for 49 apprentices Australia Base rates (27%) Base rates (49%) Queensland 68 (68%) 32 (32%) $25 597 for 29 apprentices Pay slips (18%) Pay slips (43%) South Australia 48 (57%) 36 (43%) $11 891 for 13 apprentices Base rates (34%) Pay slips (40%) Tasmania 22 (65%) 12 (35%) $20 660 for 8 apprentices Base rates (27%)

Northern Overtime (36%) 13 (57%) 10 (43%) $3 504 for 2 apprentices Territory Pay slips (36%) Pay slips (33%) ACT 15 (68%) 7 (32%) $1,736 for 5 apprentices Base rates (25%)

Page 19 of 20 Appendix D – National Apprenticeship Campaign 2015 and National Building and Construction Campaign 2014/2015

The following tables compare industry compliance rates for businesses employing apprentices that have been audited by the FWO as part of both the National Apprenticeship Campaign 2015 and the National Building and Construction Campaign 2014/2015.

Overall industry compliance rates including Building and Construction

Compliance rates, common contraventions and money recovered by specific industry

Non - Most common Industry Compliant Amount recovered Compliant contraventions Pay slips (39%) Retail Services 75 (60%) 49 (40%) $7,480 for 14 apprentices Base Rates (33%) Base rates (42%) Manufacturing 115 (59%) 79 (41%) $77,545 for 73 apprentices Pay slips (27%)

Electrical Base rates (40%) 79 (50%) 79 (50%) $90,818 for 90 apprentices Services Pay slips (25%) Base rates (42%) Automotive 64 (45%) 77 (55%) $40,721 for 41 apprentices Pay slips (35%) Pay slips (31%) Hair & Beauty 30 (45%) 37 (55%) $23,551 for 27 apprentices Penalty rates (27%) Pay slips (31%) Other* 30 (45%) 37 (55%) $109,319 for 27 apprentices Penalty rates (27%)

Building and Base rates (63%) 122 (65%) 65 (35%) $69,785 for 194 apprentices Construction Pay slips (17%)

*This category relates to apprentices working in an industry that did not fall within the scope of the 5 specified National Apprenticeship Campaign industries. An example of apprentices that fall within the ‘other’ category is an apprentice motor mechanic who works for a business in the transport industry.

Page 20 of 20