Government Exploring Introduction of Wage Theft Laws: PM

Published July 25, 2019 (last updated August 12, 2020) -

Prime Minister Scott Morrison has warned employers who underpay or exploit workers in other ways may face jail time and criminal penalties, with his Government set to draft laws to criminalise what is termed wage theft.

“Right now, the Attorney-General is drafting laws to deal with criminalising worker exploitation,” Morrison said in parliament during question time, according to the Sydney Morning Herald.

Industrial Relations Minister Christian Porter, who also holds the portfolio of the Attorney-General, said that any new such laws would be “a strong and unambiguous message to those employers who think they can get away with the exploitation of vulnerable employees”. On Wednesday Porter described MADE Establishment’s $200,000 fine, for underpaying their workers by $7.8m, as “light”.

Support for proposed criminal penalties for underpayments has also come from former Australian Competition and Consumer Commission chairman Allan Fels. Fels, who also chaired the Migrant Worker Taskforce set up in response to the 7-Eleven underpayment case, said that the proposal could tend to a “systematic breakdown” in the Australian labour relations.

“There should be the real prospect of jail sentences … in sustained, substantial and intentional cases,” Fels said.

“Nothing less would attack a systematic breakdown in our wage payment system.”

On of the taskforce’s recommendations was to introduce penalties for worker exploitation that were in line with consumer laws, which can impose fines on unlawful business ranging from $10m to 10% of annual turnover.

Porter has said he and the Government will consult on the legislation with unions and employers over the next few months, as part of the Government’s already announced review of industrial relations regulations and laws.

The proposed criminalising of wage theft, Porter says, would also aim to “protect vulnerable workers and ensure law-abiding Australian employers are not undercut by unscrupulous competitors”.

Australia Industry Group chief Innes Willox is wary of any criminilisation as “the vast majority of employers do not intent underpay staff and most cases of underpayment were genuine errors,” adding that criminal cases “would not deliver back-pay” to workers, whose civil cases would likely be “put on hold until the criminal case is concluded”.

Former Fair Work Ombudsman Natalie James said the MADE Establishment case should serve as a warning that businesses could not afford to be lax about Fair Work compliance.

“If it wasn’t already clear, the events of last week show that business can’t afford to take a ‘set and neglect’ approach to HR and payroll,” James said.

“The community and their employees and customers expect them to get this right. With large businesses identifying legacy underpayments, no company should think itself exempt from the risk.”

Senior Employment Relations Adviser at Employsure, Michael Wilkinson hit back at the announcement.

“It doesn’t make sense — why create fear in the business community?” he asked.

According to Mr Wilkinson, wage underpayment is an undeniable problem across the country, but that investigation into the causes is needed rather than heaping more regulation, compliance, and punishment onto employers.

“Before we label an entire section of Australia’s economy as bosses intent on ripping off their staff, can we perhaps examine a deeper reason why employers might be struggling to pay their staff correctly?” he said.

“While systematic underpayment is a serious matter, it’s honest errors and a lack of understanding of entitlements that puts smaller hospitality businesses at risk,” Wilkinson said. “Yet ignorance is not an excuse in the eyes of the FWO, which will pursue cases of underpayment in an attempt to reclaim any unpaid wages.

“It’s no secret that we have one of the most complex workplace relations systems in the world, and hospitality employers are especially prone to making wage errors,” he said. “Between casuals, part-time and full-time workers, along with rising minimum wages, various penalty rates and Award entitlements, it’s a merry-go-round and they can find it hard to navigate.

“Thirty percent of calls from our clients in this sector will relate to basic employee entitlements, so it’s clearly an area where they struggle.”

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