Senate inquiry calls for laws to eradicate ‘systemic, sustained and shameful’ wage theft

Wage theft in Australia is systemic, sustained and shameful and workers are often too scared to speak out for fear of repercussions, according to a scathing Senate inquiry report, which calls for new laws to protect employees.

A Senate committee – created in 2019 to investigate illegal employee underpayment – ​​has made 19 recommendations to end the practice.

A key recommendation is that the federal government amend the Fair Work Act to prohibit wage theft.

The legislation would apply to the theft of all employee compensation, including loadings, penalty rates, overtime, holidays, allowances and pension security.

This follows a series of high-profile underpayment cases at celebrity-run hospitality venues and some of the country’s largest employers, including Qantas, NAB, CBA, Coles, Woolworths, Super Retail Group and ABC. .

The Senate committee found that the current legislative and regulatory framework was inadequate to prosecute wage and pension theft.

“Systemic wage theft is often a deliberate move by companies participating in a race to the bottom to drive down wages and increase profits,” the report said.

The Senate committee recommended increasing penalties for wage theft and making it illegal for bosses to pay staff below minimum wage.

Hospitality, retail, horticulture, franchise [businesses] and higher education were highlighted as being among the worst offending sectors.

A witness told the inquest: “In the hospitality industry, exploitation has become the norm…I once complained to my boss about overtime. like this forever.”

The report said various sources said underpayment was affecting thousands of workers, “robbing them – and the Australian economy – of billions of dollars every year”.

In 2020, PwC estimated that around 13% of Australia’s total workforce was affected by underpayment, with higher rates in certain sectors, such as the hospitality sector.

He used Fair Work Ombudsman data to estimate the monetary value of underpayments by industry, estimating it at around $1.35 billion per year:

Industry Super Australia estimated the gap between what should have been paid and what was paid in 2018-19 at $5 billion, affecting around a quarter of the workforce, or almost three million people .

ATO under fire

The committee said it had heard that the Australian Taxation Office (ATO) had taken “a permissive approach to pension theft”.

“The ATO, the committee has been told, does not properly penalize non-compliant employers and repeat offenders,” its report said.

“Additionally, the ATO does not communicate with employees who have a pension theft claim, nor does it have accurate visibility into the extent of the unpaid superannuation, despite the introduction of Single Touch Payroll, which theoretically makes it more visible.”

Migrant workers at risk

The report contains several recommendations to protect migrant workers, including protecting whistleblowers and temporary visa holders who report exploitation or wage theft.

He found that deliberate underpayment was generally prevalent in labour-intensive industries, which have a high proportion of unskilled workers and where precarious employment conditions are common.

The committee – which included five Labor members, four from the Coalition, Greens senator Mehreen Faruiqi and independent senator Rex Patrick – also examined the diminishing power of unions to enter workplaces and investigate wage theft claims.

Government senators on the committee tabled a dissenting report, commenting on each of the report’s recommendations.

“Throughout its tenure, the Australian Government has introduced a range of measures to support employees’ rights in this regard,” the Coalition senators said.

“In our view, the majority report does not take sufficient account of the positive impact of these measures and offers a series of recommendations that are insufficiently supported by evidence.”

Norman D. Briggs