Waging war on organised wage theft

Attorney-General Christian Porter. Picture: AAP
Attorney-General Christian Porter. Picture: AAP

Never let it be said that this federal government is indifferent to the plight of workers, particularly those who are exploited and subject to deliberate wage theft. Existing legislation has been updated and there are plans for more to come.

In late 2017, the Protecting Vulnerable Workers Act was passed. This provided stronger penalties for deliberate underpayments of wages and entitlements, unreasonable deductions or cashback arrangements and deliberate misclassification of employees.

A Migrant Workers’ Taskforce report was completed, too, and more than $60m in additional funding was allocated to the Fair Work Ombudsman.

In its 2017-18 annual report the FWO says it began 35 proceedings in court, secured more than $7.2m in court-ordered penalties and recovered $29.6m of underpayments on behalf of 13,367 workers.

The Australian Building and Construction Commission in recent times has recovered $1m worth of wages for underpaid employees.

Now, federal Attorney-General Christian Porter wants to take things further. Wage theft is in his sights, so a discussion paper has been released and community feedback is sought by October 25.

The paper is titled Improving Protections of Employees’ Wages and Entitlements: Strengthening Penalties for Noncompliance.

It states: “Wage underpayment and employee exploitation deny employees their legal entitlements and have the further effect that there is not a level playing field for employers, such that the overwhelming majority of employers who are trying to do the right thing are competing against those that underpay or exploit workers.”

The government considers it “unacceptable that there is a persistence of underpayment and exploitation behaviours by a small number of employers”, so there is a “strong case” for the penalty, compliance and enforcement framework in the Fair Work Act to be improved.

Employers can and do make “genuinely unintentional mistakes”, the paper says, partly because the “complexity of the industrial relations system” leads to miscalculations, and these are “rectified once identified”. However, a cohort of employers “knowingly underpay, or otherwise exploit, employees”.

Porter is trying to strike a balance between “recognising no underpayment is trivial and that all underpayments are serious” yet not being “crushingly punitive in cases of genuine mistakes leading to underpayment”. His paper acknowledges that “penalties ruin businesses and ultimately hurt the employees they are designed to protect”.

The document states the most serious wage theft occurs when there is “scale, or repetitious nature, or state of knowledge”. In these cases, “a criminal law context” is desired, where penalties of up to 10 years’ jail are being considered.

What the paper does not say, though, is that the most serious form of wage theft, with scale, repetition and deliberate knowledge, occurs within the payroll departments of some of the largest employers in the retail and fast-food sector.

The practice occurs within the context of collaborative relationships between unions and business, where everyone is nice, polite and co-operative.

Vast swathes of enterprise agreements have been struck and these allow significant numbers of employees to be paid rates of pay that are below the legal minimum, the relevant award. Union leaders have willingly put their signatures on these documents and enriched their unions by doing so as the employers, in return for the favours, push union membership on to the workforce.

Going by the numbers of agreements and workers covered, it is estimated that a staggering amount — about $1bn — in wage theft has occurred in this way.

This type of wage theft must be recognised because it is so significant and so pervasive. It needs a label of its own: organised wage theft. It needs special penalties, not only for employers but also for unions and employer groups.

The Fair Work Commission, too, should not be immune from blame. Organised wage theft has been allowed to transpire because the commission has been derelict in its duty and waved through union-signed agreements without subjecting them to proper scrutiny.

Organised wage theft is occurring right now, as there are many of these agreements in place.

Porter should shine a light on the issue by ordering a review of all current enterprise agreements struck by key unions. (He knows who they are.)

When it comes to the industrial relations space, the Coalition is still clawing its way back from the political disaster that was Work Choices. The trust of working people, once broken, takes time to repair, so an extra effort is warranted.

Employees vote for the Coali­tion and there is no better time than now for the government to establish new credentials and enhance its appeal to the average worker. The best way to do this is by calling out the organised wage theft that is occurring and put a stop to it.

Those large employers that have struck dodgy deals with unions to achieve enterprise agreements that pay below the award might consider themselves formally on notice.

Members of the Fair Work Commission, too, also might sit up a little straighter.