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Wages theft

A new term has been added to the Industrial Relations lexicon: “Wages Theft”. In fact, it has been asserted that the underpayment of wages to employees has become part of the business model for some shonky operators.

The federal government has already publicly committed to criminalise wage theft and has two discussion papers in play:

  • In addition to tougher penalties to crack down on persistent underpayment and exploitation of employees, the first discussion paper raises the possibility of increased penalties for incorrectly classifying employees as independent contractors, a common way for employers to escape paying entitlements; and
  • The second paper proposes lifting the four-year cap on wage deals for new work sites, responding to employer concerns that unions are able to hike costs when agreements expire mid-way through major projects.

Meanwhile, the Victorian state government has gone its own way, with plans afoot to implement legislation making the underpayment of wages, as well as the withholding of entitlements such as penalty rates, superannuation and leave a criminal offence. The legislation will also apply to employers who dishonestly falsify employment records or fail to keep employment records, recognising that failing to keep or falsifying records is often used to disguise wage theft.

Under the proposed Victorian legislation, employers who deliberately withhold wages, superannuation or other employee entitlements, falsify employment records, or fail to keep employment records will face fines of up to $190,284 for individuals, $951,420 for companies and up to 10 years jail.

More employers receive huge fines

In the meantime, the Fair Work Ombudsman continues to successfully prosecute employers who do the wrong thing. In addition to the $350,000 plus fine mentioned in my last blog, with a plumber being fined $150,000 for underpaying two apprentices (and falsifying documentation); and Malaysian Restaurant chain PappaRich, was PuppaPoor to the tune of $307,802 for underpaying 154 employees.

Bad for Business

Underpaying workers is bad for business: I have received many complaints from businesses who are doing the right thing and paying their employees according to law but are losing work to cheaper shonky operators. Australia needs to implement the same rigour on the payment of employees as it does on collecting taxation – and labour law is nowhere near as complicated as taxation law!

If you are a business and believe that you are missing out on work because of your competitor’s unlawful behaviour, speak up! The Fair Work Ombudsman is there to help employers as well as employees.