Taskforce recommends criminal penalties for wage theft

Businesses that inadvertently or deliberately underpay workers could soon face criminal charges, if recommendations made in a report by the Migrant Workers’ Taskforce are put in place.

The taskforce was established by the federal government in response to revelations of significant underpayment issues plaguing certain industry sectors. While many of the recommendations focus purely on international workers being taken advantage of in Australia, some are more broad and extend beyond migrant workers.

“Wage underpayment may be inadvertent, but the outcome is no different as to when it is deliberate,” the report reads.

“The terms wage exploitation and wage theft are more emotive, but also apt descriptions of the problem, which in essence involves employers not complying with the minimum legal entitlements of their employees.”

As a result of the “widespread levels of non-compliance with relevant laws”, the report recommended criminal sanctions be introduced to punish businesses which produce the most extreme cases of clear, deliberate and systematic exploitation.

Additionally, the report stated the Fair Work Act may not be sufficient in meting out these judgements moving forward, as it relies heavily on civil penalties, and recommended the general levels of penalties for wage exploitation breaches be increased to meet the severity of the mistake.

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Awards are complex

The retail industry has had a pretty spotty year in regards to paying staff correctly, with high-profile cases such as Lush and Super Retail Group bringing the problem into the spotlight.

Last year, Lush said it owed staff an average of $400 each, for a total of $2 million, while Super Retail Group announced it had set aside $7.9 million to cover the estimated cost of its own staff underpayment.

While both of these retailers did underpay their workers, they also came clean and did so as transparently and quickly as they could – a key differentiator, according to Australian Retailers Association executive director Russell Zimmerman.

“Understanding the complexity of the award, I think anybody could make a mistake inadvertently,” Zimmerman told IR, noting that he doesn’t believe such a mistake should lead to criminal charges.

“But, where you’ve got an issue is where a business has been pulled up by Fair Work, been told to correct its ways and then continues to pay the wages incorrectly… that’s a completely different situation.”

National Retail Association chief executive Dominique Lamb agreed with this sentiment, noting the NRA would support criminalisation of wage theft only in the event an employer did so knowingly.

As was seen with both Lush and Super Retail Group, the main reason for the underpayments was due to payment systems having trouble with the complexities of the modern retail award.

But, as Zimmerman points out, if a review into the modern award were to be carried out with the intention of simplifying it, it would have to be done properly and not just to “tweak the edges”.

“You’d have to go back to basics and start looking right through it,” Zimmerman said.

“I think [a review] is something we would support, [but] you’d have to make sure nobody is worse off; neither employee or employer.”

Until such a review, however, the current system will remain in place, with
Lamb urging retailers to perform a thorough check of payroll systems to ensure they are meeting their responsibilities.

“All retailers certainly need to be alert and proactive when dealing with their employees’ pay and entitlements,” Lamb told IR.

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