An employment relations adviser has lambasted Labor’s plans for a crackdown on wage theft, suggesting that reform rather than regulation is needed to address wage underpayment.
According to The Australian Financial Review, Opposition Leader Bill Shorten pledged to establish a new tribunal to “operate alongside the Fair Work Commission and adjudicate quickly on claims of up to $100,000 per worker”.
“Today we’ve announced a small claims tribunal to help workers ensure that if they have been ripped off, it’s not a long and cumbersome legal process,” he said at a business event in Western Australia.
“We can help people sort out matters quickly, efficiently and effectively.”
Mr Shorten said such a move is designed not just to address “sham contracts and abuses in the labour hire system”, but to address the unfair advantage this brings for dishonest employers.
“The vast majority of employers, the good employers, take a hit too,” he said.
“It’s very hard to pay people properly if you’ve got competition down the road operating like a bottom-dweller without any proper respect to safety or paying proper wages. Good businesses lose contracts to those businesses.”
‘It doesn’t make sense’
Senior employment relations adviser at Employsure Michael Wilkinson (pictured) hit back at the proposal.
“It doesn’t make sense — why create fear in the business community?” he asked.
According to Mr Wilkinson, wage underpayment is an undeniable problem across the country, but that investigation into the causes is needed rather than heaping more regulation and compliance onto employers.
“Before we label an entire section of Australia’s economy as bosses intent on ripping off their staff, can we perhaps examine a deeper reason why employers might be struggling to pay their staff correctly?” he said.
“Small businesses need help, not threats of a tribunal.”
He added: “Imagine what this system is like for a small business owner. Not only are they managing the merry-go-round of pay rates, they’re also juggling stock, inventory, supply chain, rostering, marketing and customer service.
“Of course, there are rogue operators — every industry in every economy has them. But before we tar all of our small business owners with that brush, let’s ask a bigger question: is it possible that Australia’s increasingly complex workplace relations system is contributing to the problem?”
‘The system is broken’
Two Australian academics who recently authored a report on the issue of wage theft welcomed Labor’s announcement, but admitted that “the system is broken”.
“Our study on wage theft among almost 4,500 temporary migrant workers showed that underpaid migrant workers don’t get their money back and the system is broken,” said Dr Laurie Berg, senior law lecturer at UTS Law.
Dr Laurie, who co-authored the Wage Theft in Silence report that was released in late 2018 with UNSW Law’s Bassina Farbenblum, said their research suggested half of temporary migrants are underpaid, but only a fraction actually recoup the money owed to them.
“There’s no way to break this cycle unless workers have a quick, cheap and accessible avenue to reclaim the wages they are owed, and can hold employers to account,” Ms Farbenblum said.
Parliamentary report recommended immediate action
In November 2018, a Senate committee issued its report on the issue titled Wage theft? What wage theft?! which, despite the name, made a list of 22 recommendations to the government to address worker underpayment.
“The committee recommends the government take immediate steps to protect vulnerable workers subject to wage theft and exploitation by companies who continue to operate with impunity,” it said in the first of its recommendations.
It also suggested changes be made to the Fair Work Act to extend protections for “vulnerable workers” from franchise arrangements.
The federal government subsequently gave “in principle” support for all 22 recommendations in March this year.
The committee’s full report can be found on the parliamentary website.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.