Bargaining Council Compliance Orders: What Employers Should Do Next

Receiving a bargaining council compliance order is often the moment employers realise there may be a serious issue.

By that stage, the matter is no longer theoretical. It is already formal, documented and moving toward enforcement.

Many employers underestimate what a compliance order means and, more importantly, what happens next. Incorrect or delayed responses can escalate the situation into enforcement proceedings, arbitration and potentially court action.

What Is a Compliance Order?

A compliance order is a formal directive issued by a bargaining council (usually through an agent or inspector) stating that:

• The employer is not complying with a collective agreement, and

• Specific steps must be taken to remedy the non-compliance

This may relate to:

• Underpayment of wages

• Failure to pay allowances

• Non-payment of benefit fund contributions

• Non-compliant working conditions

It is not simply a warning. It is the beginning of an enforcement process.

The Misconception: “We Can Deal With This Later”

Many employers react to compliance orders by:

• Ignoring them

• Delaying a response

• Assuming they can resolve it informally

This is risky.

Compliance orders typically include deadlines. Failure to act within those timeframes can result in escalation, often without further warning.

What Happens If You Ignore a Compliance Order?

If an employer does not comply or respond appropriately:

• The matter may be referred to arbitration

• The compliance order may be made an arbitration award

• The award can be enforced as if it were a court order

This can lead to:

• Financial enforcement

• Attachment of assets

• Further legal proceedings

At this stage, the employer is no longer managing a compliance issue. It is dealing with enforcement.

The Real Risk: It’s Usually Not Just One Issue

A compliance order often reflects broader concerns.

For example, a finding of underpayment may indicate:

• Ongoing payroll misalignment

• Historical underpayment

• Multiple affected employees

This means the financial exposure may extend beyond what is immediately stated in the order.

Where Employers Commonly Get It Wrong

1. Failing to Assess Whether the Council Applies

Some employers assume the compliance order is incorrect because:

• They never joined the council

• They do not consider themselves part of the industry

This may or may not be correct, but it must be assessed properly.

Ignoring the issue does not resolve it.

2. Responding Informally Instead of Strategically

Employers sometimes:

• Send informal emails

• Provide partial information

• Attempt ad hoc resolutions

Without a structured approach, this can weaken the employer’s position.

3. Missing Deadlines

Compliance orders are time-sensitive.

Failure to respond within the prescribed period can result in automatic escalation.

4. Underestimating Financial Exposure

Employers often focus on the immediate claim without considering:

• Historical liability

• Additional employees

• Interest and penalties

The exposure may be significantly larger than it first appears.

5. Attempting to Fix Issues Without Understanding the Risk

Some employers try to correct payments or practices quickly without:

• Understanding the full scope of the issue

• Considering the legal implications

• Addressing underlying compliance gaps

This can create inconsistencies and further complications.

A Practical Example

A bargaining council issues a compliance order stating that:

• Employees have been underpaid relative to prescribed rates

• Contributions to a benefit fund have not been made

The employer delays responding and continues operating as before.

Outcome:
The matter escalates to arbitration, and the compliance order is enforced.

The employer may now face:

• A binding award

• Expanded financial exposure

• Enforcement action

What Employers Should Do Next

When a compliance order is received, the focus should be on assessment, not reaction.

Key considerations include:

• Whether the bargaining council applies to the business

• Whether the findings are factually and legally correct

• The extent of potential historical liability

• The available response options within the required timeframe

This is not simply an HR issue. It is a legal and financial risk issue.

Can a Compliance Order Be Challenged?

Yes, but this must be done properly and within the applicable timeframes.

Employers may:

• Raise objections

• Engage with the council

• Participate in arbitration

However, the strategy depends on the specific facts and risks involved.

Why Early Action Matters

The earlier the issue is addressed:

• The more options are available

• The greater the ability to manage exposure

• The lower the risk of escalation

Delays reduce flexibility and increase pressure.

Final Thoughts

A bargaining council compliance order is not the start of a conversation. It is the start of a process.

Employers who treat it lightly often find themselves dealing with enforcement proceedings they could have avoided. The real risk lies not in the order itself, but in how the employer responds to it.

Need Help Responding to a Compliance Order?

Barter McKellar advises employers on bargaining council compliance orders, enforcement proceedings, underpayment claims and labour disputes.

If your business has received a compliance order, early legal guidance can help you assess the position, manage risk and respond effectively.

Contact our team for practical, commercially focused labour law advice.