Wage theft and Coalition crackdowns

• Wage theft has been cracking headlines all year, with heavy hitters like Woolworths, Wesfarmers, and MAdE Establishment coming under fire
• A March task force into the issue suggested the Government needs to bring in harsher penalties and grant more power to the Fair Work Ombudsmen
• Now, Attorney-General Christian Porter and the Coalition have been throwing around the idea of criminalising the act to bring about harsher punishments for culprits
• Recently, Christian suggested company directors who underpay workers could start to face bans from sitting on boards
• Future legislation, however, will not be retroactive — meaning companies already caught out will not be affected

Over 60 companies have been penalised by the Fair Work Ombudsmen for underpaying workers in 2019 alone.

Heavy hitters like Woolworths, Super Retail Group, Wesfarmers, and, of course, former Masterchef judge George Columbaris’ MAdE Establishment are handing out back payments to the tune of millions of dollars, but the issue goes far deeper.

Several small businesses and franchise owners across the country have either been caught or turned themselves in for not coughing up employee entitlements over the year.

While being fined some tens-of-thousands of dollars might strike a blow to the small-business culprits, for major corporations turning millions of dollars in profits a year, the penalties may feel more like a slap on the wrist than a future deterrent.

Furthermore, making major back payments is not so much a penalty as the bare minimum — workers are simply getting what they should have received in the first place.

To tackle the issue, Federal Attorney-General Christian Porter and the Morrison Government have been chewing on the idea of criminalising wage theft so as to dish out stronger punishments to culprits.

Community feedback has been sought in the form of a discussion paper on the topic, with another one on the way in coming weeks.

The issues

A task force was put together in March 2019 to review the issue of wage theft, and results suggest the problem is more widespread than initially thought.

The core focus of the Migrant Workers’ Task Force was, as the name suggests, to identify temporary visa workers, a demographic who make up the majority of victims of wage theft.

In spite of this, the task force’s report still touched on the widespread nature of the underpayment issue.

A review of Fair Work Ombudsmen (FWO) annual reports puts the numbers into perspective;

• In 2014-2015, the FWO recovered more than $22 million for over 11,500 workers
• In 2015-2016, $27 million was recovered for 11,100 workers
• 2016-2017 saw over $30 million recovered for 17,000 workers
• In 2017-2018, the FWO recovered $29.6 million for 13,000 workers

The task force said it is important to note that these figures include recoveries both from genuine mistakes and malpractice.

Furthermore, these are just the companies who fessed up or got caught out. Real numbers of wage theft incidents can be difficult to track.

The report read:

“Given the hidden nature of the problem it is not possible to put a firm number on it. However, given the number of case studies and other pieces of information outlined in this chapter, it is clear that a significant proportion of temporary visa holders in Australia are being exploited.”

Report of the Migrant Workers’ Taskforce

In response, the Attorney-General said in his request for submissions for the discussion paper that the Government needs to be able to balance penalties for genuine mistakes leading to underpayment and recognising that no underpayment is trivial.

This does not mean, however, that inadvertent underpayments will go unpunished, or that punishments for deliberate underpayment will be light.

Underpaying bosses could be banned

The most recent discussion on new legislation regarding wage theft came in the form of a conversation between the Attorney-General and The Australian. Christian Porter told the publication that directors of companies that underpay workers could be banned from sitting on boards.

“I suspect the only way you will get board directors … to take this stuff seriously is if there is something on the line for them,’’ Christian said.

He said the Coalition is considering empowering the Fair Work Ombudsmen to issue ban order applications against directors found guilty of wage theft.

“These organisations have a massive amount of time, energy and resources devoted to ensuring they don’t pay a cent more tax than they have to; they get involved in sporting teams and social issues,” he told The Australian.

“If they put commensurate resources into making sure they got their payrolls working in accordance with EAs (enterprise agreements), awards and the law, they wouldn’t be having this problem,” he said.

While this talk is currently only speculative, it follows the recommendation of the task force that the Government should perform a “public capability review of the FWO to ensure it has the resources, tools and culture necessary to combat effectively the wage underpayment problem particularly affecting temporary migrant workers”.

The NSW crackdown on migrant wage theft

In more recent tangible developments, the New South Wales Attorney-General Mark Speakman announced on Wednesday the launch of a new legal service targeting migrant workers who suspect they have been ripped off.

The Migrant Employment Legal Service (MLS) is a $1.6 million statewide project to provide legal help to migrants and temporary visa holders.

Four legal centres across the state will join forces to cover what Mark called a “critical gap” in legal services.

“For migrants and temporary visa holders, MELS offers free legal advice, representation and community legal education if you’ve been ripped off by your employer or unfairly dismissed,” Mark said in a media release.

“Every employee in Australia should be paid what they’re owed and this project will go a long way towards holding to account employers who exploit their workers,” he said.

Acting NSW Minister for Multiculturalism Geoff Lee said this initiative plays a crucial part in helping multicultural communities.

“The project will offer on the ground help to underpaid workers with the provision of free legal advice to almost a thousand people a year,” he said.

Moving forward

With wage theft issues cracking headlines so frequently throughout the year — and the talks of criminalising the act — it seems big companies are starting to get nervous about what this means for them.

Woolworths, Qantas, and the ABC, for example, are some companies that performed internal reviews and publically admitted their errors before having the chance to be investigated by the FWO.

Any future legislation will not be retrospective — meaning directors that come clean about major underpayments before a new bill is passed will not be affected.

So, with talk of decade-long prison time for serious offenders being thrown around by Christian Porter and the Coalition, perhaps more big companies will review their own payment policies to make sure they’re in the clear.