Legal Expert Makes Case For Wage Theft ‘Compensation Fund’

Published August 05, 2019 (last updated July 21, 2020) -

A leading Adelaide legal expert has recommended a new statutory fund that would allow workers to seek compensation to recoup unpaid wages.

Writing in the Adelaide Advertiser, Law Society of SA President Amy Nikolovski said that proposed laws to criminalise underpayment would only target the most severe cases, and tougher financial penalties on offending employers should be used to establish a national fund to support affected workers.

“For many people who have been underpaid, the period of underpayment not only can cause great financial strain, but this in turn can have a significant impact on a person’s health, relationships, and self-esteem,” she says. “Victims of underpayment should have the ability to seek compensation.”

“An alternative option for reform could be to set up a statutory fund to provide compensation for underpaid workers. The fund would be built up by hefty fines imposed on offending employers, and the ability to pursue compensation would be relatively informal and straightforward.

“Such a scheme would also allow victims to recover costs if successful.”

The call comes after a series of high-profile underpayment cases affecting prominent businesses in the hospitality sector, notably George Calombaris’ MAdE Establishment which was recently forced to back pay workers $7.8m in unpaid wages.

Related: George Calombaris ‘Sorry’ for underpayments

Founder and Managing Director of Employsure Ed Mallett said that underpayment needed a whole of sector approach, not just financial penalties.

“Underpayment and wage theft are big issues in workplace relations right now, and it’s drawing attention to just how difficult this area of workplace relations has become,” he said.

“Any punitive measures need to be combined with efforts to educate and support employers,” he said. “Many employers don’t intentionally do the wrong thing. Most are just confused about the workplace relations system they operate in, and trying to navigate a labyrinth of different pay rates.”

“It’s important that penalties are coupled with programs that educate and support employers, along with changes that can make their lives easier so these types of mistakes can be avoided in the first place.”

Related: Ask Our Specialist: Understanding And Avoiding Underpayments.

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