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New Australian laws could slap wage thieves with ten years jail time, million-dollar fines and public notices admitting they underpaid staff

Jack Derwin
  • The Attorney-General's Department has released two new discussion papers outlining the need for new penalties to combat wage theft.
  • Australian businesses found guilty could face million-dollar fines and be forced to display a public notice of their crimes, while directors could face disqualification and up to ten years imprisonment as punishment.
  • It comes after a string of underpayment scandals including George Calombaris' Made Establishment as well as Bunnings, Coles, Woolworths, Sunglass Hut, and the Commonwealth Bank among others.
  • Visit Business Insider Australia’s homepage for more stories.

Not paying your workers is fast becoming a national pastime.

With everyone from celebrity chefs, hardware darling Bunnings, pizza chain Dominos and even the Commonwealth Bank – generally too busy rorting customers, if the Royal Commission is to be believed – have been caught in the act.

But as the number of scandals borders on the grotesque, and with Coles joining rival supermarket Woolworths this week among our national culprits, the government seems to think enough is enough.

Industrial Relations Minister and Attorney-General Christian Porter is now threatening a crackdown that would see existing laws tightened and penalties raised against those found indulging in a bit of underpayment.

"The Government considers it unacceptable that there is a persistence of underpayment and exploitation behaviours by a small number of employers and considers there to now be a strong case that the current penalty, compliance, and enforcement framework for breaches of the Fair Work Act... needs to be improved," the Attorney-General's Department wrote in a discussion paper released on Tuesday.

In it, the government suggests harsher penalties will likely be required to punish and discourage worker exploitation, given some companies find the existing ones simply "a cost of doing business". Currently, individual employers found guilty of criminal offences faces fines of around $1 million or three times the underpayment while companies face $9.45 million, 10% annual turnover, or three times the contravention. These upper limits are now up for review.

These could soon be bolstered by "director disqualification" orders, allowing contraventions of the Fair Work to claim the scalps of those running the company. Imprisonment of between five to ten years could also be considered for particularly blatant underpayment scandals.

Those who oversee migrant exploitation specifically could face even harsher repercussions, including being banned and publicly shamed including the requirement to "display a notice admitting to having underpaid their employees", the papers suggest.

The government also appears to have considered cases like George Calombaris, whose Made Establishment's underpayment scandal last year cost the business $7.8 million, and Calombaris his celebrity status and a $200,000 'contrition payment'. The Attorney-General suggests these contrition payments, which have been increasingly ordered by Fair Work, be legislated although with further consideration as to how large they should be. Cases like Calombaris and Sunglass Hut, which was ordered to pay $50,000 for a $2.3 million breach, have spurred criticism against the Fair Work Ombudsman, with some claiming they were too low given the scale of the contravention.

While acknowledging wage theft has been a major issue in Australia for years, the government also admitted the exact extent is difficult to quantify. The Fair Work Ombudsman in 2018 alone recovered wages for more than 13,000 Australians, while the government agrees with the Migrant Workers Taskforce that "a significant proportion of temporary visa holders in Australia are being exploited".

However, while all cases of wage theft might offer an advantage to a business' bottom line, the government also argues the vast majority of employers aren't underpaying their workers deliberately.

Ben Thompson, co-founder of HR software Employment Hero, agrees the current award system is "incredibly difficult".

"We’ve seen many other large employers like Super Retail Group, Lush, Qantas and ABC get payroll wrong. These businesses have whole departments dedicated to paying their people correctly," he told Business Insider Australia in a statement. "When you consider that large employers with more than 200 employees only make up 4% of businesses in Australia, how can we reasonably expect the other 96%, who don’t have in-house expertise, to get it right 100% of the time?"

"The unfortunate reality is that Australia’s modern award wage system is so complex that it is inevitable that employers will continue to make mistakes even with the very best of intentions."

READ MORE:

Unions are pushing for 5-year prison sentences and multimillion-dollar fines for wage theft, but an employer group says it shouldn’t be considered a crime at all We asked two employment experts why Australian workers keep getting ripped off, and they gave two very different answers Here's a rolling list of the celebrity-chef restaurants that have been busted underpaying their staff