The government has been urged to practise some restraint before punishing bosses for “wage theft” claims, noting it is “demonising” employers and disadvantaging staff.
Sydney insolvency lawyer Ben Sewell said what looks like wage theft could just be the lack of awareness that payroll systems needed to be updated in line with a law change, adding that “punishment should always be a last resort”.
“Creating new penalties and offences is a knee-jerk reaction, and often just a cop-out for governments who want to look like they are acting, without spending any time or money on solving the actual problem,” Mr Sewell said.
“Commonwealth and state governments need to put their money where their mouths are. There needs to be increased funding to government agencies to support business when regulations change to ensure they are up to date.”
Mr Sewell said wage theft claims are more complicated for SMEs as they do not have the resources of big business and struggle to update payroll systems.
He added the term “wage theft” itself is problematic, noting: “All wage theft involves the underpaying of employees. But not all underpaying of employees is wage theft.”
Worker underpayment has dominated national conversation since July this year when it was revealed that the Fair Work Ombudsman had taken action against a restaurant company associated with former MasterChef judge George Calombaris.
The Commonwealth government announced in July that it would bring in new criminal laws against such conduct. However, it has been delayed and is currently consulting on measures to criminalise wage theft and looking at whether civil penalties are sufficient.
“Looking at the changes themselves, this new direction on underpayment will penalise those employers that are already stretched or in financial troubles,” Mr Sewell said.
“Extra penalties are likely to push many struggling businesses under. As businesses that are wound up have very few assets left to pay employee entitlements, this is the worst possible outcome for employees.”
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