Yahoo Finance Underpaid worker wins $15k payout as millions of Aussies ripped off by 'rampant' practice
Wage theft costs Aussie workers a staggering $1.35 billion a year, and long overdue changes now make it a criminal offence.
Underpaid worker James Lea was just 22 when he started as a bartender at a restaurant where he was expected to work long shifts. He was paid well below the award wage but was knocked back when he asked for a pay rise.
After quitting his job he decided that he would fight back. Lea was paid $18.50 an hour — much less than the award rate for a casual level two hospitality worker, which was $24.41 at the time.
He was often expected to work hours past his allocated shift times, while missing out on penalty rates for weekends, late nights and public holidays.
"The longest shift I did while at the venue was roughly 17 hours, from around 9am till approximately 2am the next morning," Lea, now 30, told Yahoo Finance.
After resigning from the role, which he held for an 18-month period, Lea joined 20 other workers who claimed they were paid under minimum wage and worked extended hours without breaks which were not accurately reflected on their payslips.
With the help of United Voice, now known as the United Workers Union, Lea managed to claim back almost $15,000 in unpaid wages and superannuation in a process that took around two years.
Wage theft costs Aussie workers a staggering $1.35 billion a year. It is "rampant" across all industries and professions, with young people, women and visa-dependent migrants — groups already disproportionately struggling as the cost-of-living crisis continues to bite — often being the most affected.
"It has a really significant impact on young people," Lea told Yahoo. "It causes a huge amount of stress. Young people are already under pressure financially."
Is wage theft a crime in Australia?
Long overdue changes to the Fair Work Act, known as Closing Loopholes, have made wage theft a criminal offence with a maximum 10-year jail term or huge multi-million dollar fines for employers who intentionally engage in the practice.
"Young people are more likely to experience wage theft," he said. "They know something is wrong. They're working really long hours each week, but are struggling to make ends meet, pay rent or buy food. It's hard to stand up for your entitlements and often the biggest barrier is knowing who to contact for support."
Do you have a story to tell? Contact yahoo.finance.au@yahooinc.com
Lea is now acting director of Melbourne's Young Workers Centre, which provides legal advice and support to Victorians under 30 and has successfully helped claim back $2 million in unpaid wages, while educating 50,000 young people including high schoolers on employment rights.
The most common claims workers seek compensation for are not being paid penalty rates, being incorrectly graded or paid below the industry award, unpaid superannuation, unpaid overtime, illegal wage deductions and not being paid for breaks or being allowed to take them.
"It's on the national agenda now, but we know it's been an issue for many, many years," Lea said.
RELATED:
'Rampant' wage theft costs Aussies up to $1.35b per year
A report by the McKell Institute, which analysed data from Fair Work Ombudsman audits, found wage theft cost Australian workers between $850 million and $1.35 billion per year, affecting 1.38 million people, or about 11.5 per cent of the country’s workforce.
Wage theft was “culturally entrenched” across all industries and all states, the report said, with NSW predictably being the worst affected, accounting for one-third of lost wages — at least $306 million per year, followed by Victoria at $221m and Queensland at $163m.
The actual numbers are expected to be much higher as the report found 27,000 businesses had underpaid 1.3 million Aussies since 2009, while the Queensland Parliament estimates workers across the state lost $2.5 billion each year as a result of wage theft.
Get the latest Yahoo Finance news - follow us on Facebook, LinkedIn and Instagram.
Unions NSW secretary Mark Morey told Yahoo Finance “wage theft is endemic in Australia and is especially pronounced among vulnerable communities".
He said the union had found more than two-thirds of jobs advertised in languages other than English were offered below the minimum wage across numerous industries including construction, hospitality, agriculture and beauty.
Under Closing Loopholes, employers face fines of more than three times the amount of underpayment, or $1,565,000 for individuals and $7,825,000 for corporations.
Australian Council of Trade Unions president Michele O’Neil told Yahoo Finance "wage theft robs working people of money they are rightfully owed".
“The practice is rampant – a recent example is the university sector, with a 2023 report by the National Tertiary Education Union revealing that university staff suffered a collective $159 million in wage theft.”
According to that report, more than 97,000 university staff had been underpaid by 32 higher education institutions across the country. In February this year, the Federal Court fined the Commonwealth Bank $10.3m for knowingly engaging in wage theft, resulting in underpayments of $16m to over 7,400 workers.
The same month, CommBank published a half-yearly profit of $4.8 billion.
“Too often, wage theft is a business model that not only harms workers, but also other businesses that do the right thing and obey the law,” O’Neil said.
