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Employers face jail for wage underpayment

Adam Zuchetti
Adam Zuchetti
07 March 2019 3 minute readShare
Prof Allan Fels

The federal government has given “in principle” support for 22 recommendations made by the Migrant Workers’ Taskforce report, which could introduce jail time for employers flouting workplace laws.

Jobs and Industrial Relations Minister Kelly O’Dwyer — who in January announced her retirement from politics at the upcoming election — said that the government “has no tolerance” for employers deliberately circumventing the rules on employee wages and entitlements.

“The exploitation of workers in Australian workplaces is not only illegal, it harms individuals, undercuts law-abiding employers and reflects poorly on Australia’s international reputation,” she said.

“The Coalition government has no tolerance for those who repeatedly and deliberately underpay workers, whether they are an Australian or a worker on a visa. For the very first time, we will introduce criminal sanctions for the most serious and egregious forms of deliberate exploitation of workers.”

Ms O’Dwyer moved to reassure employers that the proposed new rules would only be applied for criminal, rather than accidental, breaches.

“Only the most serious and egregious cases would be subject to criminal penalties, not employers that accidentally or inadvertently do the wrong thing,” she said.

The minister also said that the government is finalising plans for a National Labour Hire Registration Scheme, which she said would drive compliance among labour hire businesses in high-risk sectors.

“We have taken action to protect vulnerable workers by introducing tough new laws, increasing penalties tenfold, and providing additional funding and strengthening the investigative powers of the FWO [Fair Work Ombudsman],” she said.

What did the taskforce recommend?

The Migrant Workers Taskforce was established in 2016, tasked with examining the laws, enforcement and penalties associated with the exploitation of such workers.

It was chaired by former ACCC chair Professor Allan Fels (pictured), with David Cousins acting as deputy chair.

The final report, which can be found on the website of the Department of Jobs and Small Business, noted that on the issue of employee underpayment in Australia, “there was much publicity concerning 7-Eleven franchisees, but demonstrably the problem was more widespread”.

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

“Wage exploitation of temporary migrants offends our national values of fairness. It harms not only the employees involved, but also the businesses which do the right thing.”

It also disputed the suggestion that lower wage rates would boost the rate of compliance by employers, or that migration rates are to blame.

“Wage underpayment is simply non-compliance with existing legal requirements. It is not a problem of having too many temporary migrants. And whilst some might suggest the problem might be reduced if minimum wages were lower, we do not consider this to be the appropriate response,” the report said.

“We recognise the importance of our national wage setting mechanisms in determining appropriate living wages.”

Among its 22 recommendations put forward are:

  • Increasing penalties on employers “in line with those applicable to other business laws, especially consumer laws”.
  • Amending the Fair Work Act to specifically stipulate that temporary migrants have the same workplace protections as any other employee.
  • A ban on advertising jobs that pay rates in breach of workplace laws.
  • Criminal sanctions be introduced for serial offenders and serious, deliberate cases of worker exploitation. “Criminal offences can be punished by imprisonment and community service, as well as fines, but there can be other serious consequences, such as loss of reputation and income if disqualified from running a business,” the report noted.
  • Banning previously convicted employers from employing new temporary migrants for a set period.
  • Boosting the “information gathering powers” of the Fair Work Ombudsman, to match those of other regulators such as the ACCC, as well as increasing its resources.
  • Extending “accessorial liability” rules to cover businesses contracting out services, over and above the existing rules for franchisors and holdings companies.
  • Establishing a National Labour Hire Registration Scheme, which all operators must join, with a particular focus on the horticulture, meat processing, cleaning and security industries, and that employers can only use labour from registered labour hire companies.
  • Arming migrants with information on workplace rights even before they arrive in Australia.
  • Creating a new offense to make it illegal for anyone to “knowingly unduly influence, pressure or coerce a temporary migrant worker to breach a condition of their visa”.
  • The establishment of a whole-of-government to better inform and educate migrant workers of their legal rights.
Employers face jail for wage underpayment
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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