Maximum Penalty for Defiant Employer – A Call for Compliance Reform
Maximum Penalty for Defiant Employer – A Wake-Up Call for Compliance Reform
The ‘Bad’ in ‘the Good, the Bad and the Ugly’ from our 8 August 2025 podcast on Restraint of Trade, part 2.
In a landmark decision that underscores the importance of compliance in employment law, the Federal Circuit and Family Court has imposed the maximum penalty available on an employer for failing to comply with a Fair Work Ombudsman (FWO) issued compliance notice. The ruling, delivered by Judge Sandy Street, highlights the court’s growing frustration with repeated non-compliance and calls for urgent legislative reform.
The case originated from a 2023 compliance notice issued by the FWO, which found that the Company had underpaid a worker against his award entitlements. The notice required the company to rectify underpayments from April 2020 to August 2022. Despite this, the company failed to comply and continued operating as usual, even advertising new roles in April 2025.
The FWO proposed a penalty of 75% – 85% of the maximum available, but ultimately Judge Street rejected this proposal, instead opting for the full amount possible due to the employer’s “deliberate and defiant refusal” to engage in the process. A particularly inflammatory email from the company’s sole director to the FWO warned that pursuing the matter could lead to a class action lawsuit and suggested it would be embarrassing for several government officials. Judge Street described the email as “defiant and sarcastic,” reflecting a clear intent to disregard legal obligations.
The Judge emphasised that section 716 of the Fair Work Act 2009 (Cth), which empowers the FWO to issue compliance notices, is a core provision of the FWO’s enforcement powers. He noted that the company’s refusal to participate in proceedings and failure to provide a reasonable excuse for non-compliance prevented the court from calculating the exact underpayment amount. This, combined with the continued operation of the business and the role of senior management in the contravention, justified the maximum penalty.
Just days before this ruling, Judge Street had called for reforms increasing penalties for non-compliance and to empower the FWO to seek the removal of directors who repeatedly flout employment laws. This case serves as a powerful example of why such reforms may be necessary.
For employers, and legal representatives, this decision is a reminder of the consequences of ignoring compliance notices and the importance of engaging constructively with regulatory bodies. It also signals a potential shift toward harsher penalties and broader enforcement powers for the FWO, especially in cases involving deliberate defiance.
As the legal landscape evolves, practitioners should watch closely for legislative changes that may arise from Judge Street’s recommendations.
Fair Work Ombudsman v My IT Partner Pty Ltd [2025] FedCFamC2G 1121