Herbert Smith Freehills Kramer Podcasts
Herbert Smith Freehills Kramer Podcasts
Inside Employment & Safety (Australia): The shifting regulatory environment facing employers
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
In this special crossover episode of Inside Employment and Inside Safety, Steve Bell, Tony Wood and Lucy Boyd explore the increasingly complex regulatory landscape facing Australian employers and the growing scrutiny from workplace, safety and human rights regulators.
Steve, Tony and Lucy discuss the rise in regulatory investigations and enforcement activity, the challenges employers face when responding to overlapping regulators, and the Australian Human Rights Commission’s evolving approach to enforcing the positive duty to prevent sexual harassment. They also share practical insights on governance, compliance and how organisations can prepare for greater regulatory scrutiny.
Welcome And Why This Matters
SPEAKER_02Hello and welcome to the Inside Employment and Inside Safety podcast on the Australian regulatory landscape as it relates to employers. We're doing something special today, Lucy and Tony, we're going to be presenting this across both of our podcast channels, Inside Safety, a podcast series designed for health and safety professionals and in-house lawyers dealing with health and safety regulatory issues and inside employment session, a podcast series designed for professionals across the HR and people functions. And the topic we're going to talk about today is going to be relevant to both of those. I'm really excited. I'm joined here by Lucy Boyd, an executive counsel from our safety team here in Melbourne, and Tony Wood, one of our employment partners. And my name is Steve Bell, the managing partner of the employment, industrial relations and safety team here across Asia and Australia. And my practice, the work I do helping clients is across occupational health and safety. Something has changed in our working lives over the past sort of five or ten years across the employment and the IR team, which is that in addition to helping our clients deal with the law and deal with complaints and deal with personal issues that might be arising in the workplace, we've also become focused on the external parties to our clients, regulators. And what we're going to discuss today is the sort of rise, I suppose, of the regulatory environment as it occurs for our clients here in the Australian market, but also what that's looking and feeling like when the rubber hits the road during the investigation phase. Lucy, I was in one of our overseas offices recently talking to some of our staff, and I was explaining just the sheer volume of external state regulatory agencies which impact on our clients and can intersect with them on a day-to-day basis. And to be frank, our global clients fell off their chair when I described to them just the sheer number of employment-related or safety-related regulatory agencies which might make inquiries or ask questions of them. Lucy,
Australia’s Regulatory Burden In Numbers
SPEAKER_02there's been some research on this, hasn't there, recently, about the level and the nature and in fact the cost of the regulatory expectation in Australia.
SPEAKER_01Absolutely, Steve, it does, it feels highly regulated here and it's actually borne out by the stats. So in November last year, 2025, the AICD commissioned a study which looked at the level of regulation in Australia compared to our international peers. The stats are quite interesting. So the total cost to Commonwealth for Commonwealth regulatory compliance in Australia is nearing 160 billion per annum, which is up 65 billion since 2013. And that amount comprises 5.8% of our GDP. So huge amounts. And you know, to put that into context compared to other G7 nations, Australia ranks second only to Japan in terms of admin and regulatory burden.
SPEAKER_02If we work harder, we can get there. I reckon we can really get the public mind on the internet.
SPEAKER_01Give us a few years. And interestingly, I'll just finish with one more stat and we'll come to this today and what we're observing in practice around the level of responsibility and obligation placed on directors. So board time spent on compliance has doubled from 24% to 55% of their time in the last 10 years. So it's it's a there's a shift that's happening and it's borne out by those stats.
SPEAKER_02Yeah, and it's interesting. And it feels that way. It feels that way when we speak to our clients and their executive teams and their boards. They feel uh it's different. It's harder now than it was. Now, I we should say we're gonna have discussions about regulators and investigations in this podcast. This is not to say that regulation is wrong per se, or regulators are out to you know get employers or there's some some secret agenda. The question here is just about scale and about effort and about choice, prosecutorial decision making, investigatory decision making. I think Tony, how many regulators are you are you dealing with?
SPEAKER_00Too many. I mean, and I so this sounds a bit prejudicial and and critical. But but I mean we're in this position because the expectations in a global economy are higher and higher and higher. The legislation is more complicated, and and you know, we we when we legislate, we don't delegislate or deregulate, we we regulate and regulate. It layers up. We layer it up. And although it's no surprise in in one sense, without getting political, that the uh the the Liberal Party or what's left of it at the moment as um as an entity in in their workplace uh portfolio have got an emphasis on deregulation and cutting red cape, which is which is probably something that that you know any government, regardless of their their um their positions, really should be taking anyway.
SPEAKER_01So in their um and some in this report by the ASAD AICD, they're sort of calling for reform in that area. And um uh they've noted that the other nations have these deregulation agendas, whereas they say we don't. But um I note that in the recent budget there is an item around um decreasing regulation here in the state.
SPEAKER_00And it doesn't mean, like in a in an American or a Trump version, that you have to, you know, nuke
The Regulator Web And Overlap
SPEAKER_00nuke 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.
SPEAKER_02I mean, I have who are some of the investigatory agencies you you'll be dealing with this week?
SPEAKER_00Well, 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. Steve, you uh work safe or safe work in the respective states obviously are the parallel in your jurisdiction. Um but then there are there are the state regulators as well. 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. And we deal with those all of the time. 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. And that was at the beginning of inactivity. For inactivity, failing to take appropriate, not enforcing uh uh uh appropriately or effectively, were his words. 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. 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.
SPEAKER_02I 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. These are criminal cases being taken out of the courts by those regulators alleging breach of health and safety laws. It's just a it's a much more heated environment that it has.
SPEAKER_00Well, 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. 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.
SPEAKER_01I 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. Um, for example, the safety regulators and the new Human Rights Commission, um, we see that happen there as well. So it it becomes really difficult for our client to manage competing but different demands from different regulators.
SPEAKER_00Well, issues like bullying, uh, unsafe work environments, um, sexual harassment.
SPEAKER_02Um, 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. I mean, that is sort of beyond the pale in terms of what might be an appropriate regulatory response. Lisa, you and I helped a client out with uh some investigation activities from the Human Rights Commission recently. And I and I suppose I wanted to share that with the audience because
Human Rights Commission Positive Duty Audits
SPEAKER_02it 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.
SPEAKER_01That's right. We've seen, you know, a massive acceleration from the Human Rights Commission, and it's it's very new. Um, you know, there's only a handful of inquiries that are going on at the moment from the Human Rights Commission. Um we've also, you know, we've seen sort of a bit of activity. We've had a more formal inquiry. Uh, also, we've seen that they're taking action in terms of their focus sectors of retail and hospitality. And what we've seen there are some voluntary notices to produce documents with a range of questions. And I just thought worth sharing with our listeners because it is a very new development. It's their first sort of activity as a regulator. 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. 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. 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. 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.
SPEAKER_02Because 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. But what we saw was really quite different as you're describing. 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.
SPEAKER_01So the what was the request?
SPEAKER_02It was tens of the other.
SPEAKER_01The request was, you know, 80 pages long with a detailed analysis. Over, you know, over 400 documents were produced. 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.
SPEAKER_00Do you do you think they're overreaching though in in that case? Were they really asking too much?
SPEAKER_01The standard is very high. I think if um we looked at some of the um uh you know elements that they were asking for. For example, there's a big focus on senior leaders, which I think we see across regulators and which is understandable. That's how you drive change. 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.
SPEAKER_02There'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. But when you're a hammer, the word looks like a nail, and that's uh that's the thing. And you've got to engage with them.
SPEAKER_00Because if you don't engage them, they they as a regulator they have got the ability to investigate and to prosecute. Yeah. 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. And similarly, if the content is inadequate, then there's every risk of a prosecution in the court. That's right.
SPEAKER_01And 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. So, you know, there's sexual harassment, obviously, as the primary one, but then there's sex-based harassment, hostile workplaces. 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.
SPEAKER_02I think we wanted to show that because that is really a real acceleration of the uh regulatory risk profile than it had been previously. 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. 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. That's true, of course, in principle. 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. We had a request for information directed at a client recently that said, How often are the directors speaking to the management? How often are they attending the workplaces? 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.
SPEAKER_00But Steve, they're asking questions, and I'm seeing this from the Fair Work Ombudsman as well. They're asking questions that go to their prosecutorial decisions, and also things that would ultimately go to penalty.
SPEAKER_02Yeah.
SPEAKER_00Uh, you know, how how seriously have you taken the issue? 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
Notices To Produce And Shadow Penalties
SPEAKER_00to produce are almost identical across the ASIC jurisdiction, the safety jurisdiction, the human rights commission jurisdiction, and so on. And they have vast powers. 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. And when they cast the net very widely, it causes a whole lot of anxiety for a client. 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. And that is literally millions of documents. And by experience, unfortunately, many hundreds of thousands of dollars of costs in terms of complying just with the notice to produce.
SPEAKER_02Before you're almost a shadow penalty in its own way. It's almost almost a shadow penalty. 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. You an employer's entitled to ask genuinely, is this material being reviewed as part of the investigation? And and the truth is it's not. 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. 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.
SPEAKER_00Which 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? And invariably there is some negotiation on that. Well, why ask for it so wide in the first place? If you don't really need it, don't send us a 10-page letter. Give us one page of key documents and we can comply with that. Anyway, that's a bit of a grievance from But it's a genuine risk for clients.
SPEAKER_02There have been prosecutions this this last few months in the health and safety context. Uh, a client who'd breached a substantive health and safety obligation was prosecuted for that. 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. And the employer had uh probably a case-to-answer on some of this. Some of the answers seemed a bit cute to me, and and uh it seemed that some reasonable searches could have been done. 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. So, you know, risk kind of multiplies pretty exponentially in this. 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. But it's often not like that. You get the request in off your barrel looking for the materials. But I think a strategic positioning on this is important.
SPEAKER_00We'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. We need to involve, we need to be more uh, you know, to be a proper enforcer in the industry. And then they do that. 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. So the the I I understand that the regulator is under a lot of pressure as well. And even on a on a slightly different tact, but but similar concept. 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. No one wants to take the risk of saying, oh, well, we'll give you five pages. And he was equally critical of the Fair Work Ombudsman as he was of the uh the employers for submitting detailed volumes. But of course you're going to do that because you want to protect your position as best you possibly can. 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.
SPEAKER_02And this
Proportionality Practical Takeaways And Closing
SPEAKER_02is the challenge, the challenge of proportionality. You know, there are genuinely uh matters which need proper external investigation and there are matters that need investigation and prosecution. 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. I mean Lucy, what are you telling clients? What's your sort of takeaway point on all of this?
SPEAKER_01I I think the key takeaway point is, you know, for a while there was no activity from the human rights um commission at all. So the the key takeaway is there is now, so uh it it's not a sleeping issue. 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. 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.
SPEAKER_02Yeah, Tony, what's your what's your thing?
SPEAKER_00I mean, put your systems in place. 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. But secondly, look, as uh through through gritted teeth, you have to cooperate with the with the regulator. You want to maintain a useful, productive relationship with them, but you also don't need to roll over either. 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.
SPEAKER_02Yeah. Look, my my key message from all of this is for our clients it feels like the external pressure is greater. 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. 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. 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. I think those are really important questions. 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. 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. It has to be bad.
SPEAKER_01And 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. I think it's great that they're they're taking action because it's driving change um to prevent sexual harassment. Like who's gonna argue with that? It's just it's it's an added pressure, it's a new regulator and there's overlap. So uh it's yeah, as you say, more important than ever to have the systems in place to respond.
SPEAKER_02I couldn't agree more. Thank you, Lucy and thank you, Tony. 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. We've really enjoyed your listening. Please feed us any comments back on any topics you'd like to hear any of our team discuss as part of these podcasts. And otherwise, please follow the podcast and we look forward to seeing you next time.