Shadow Minister for Industrial Relations Tony Burke has announced the Australian Labor Party will move to establish a parliamentary inquiry into ‘wage theft’.

It follows a period of significant media attention surrounding high profile cases of underpayment, including the self-disclosure of up to $300 million by Woolworths.

Woolworths’ own review, conducted by PwC, found that approximately 5,700 of its salaried store team members were not paid in full compliance with the General Retail Industry Award.

Woolworths joins Wesfarmers, Qantas, Commonwealth Bank, Super Retail Group, Michael Hill Jewellers and many others in failing to ensure that staff are receiving their lawful entitlements.

The Federal Government has made an in-principle commitment to introduce criminal offences for the worst cases of underpayment.

As recommended by its migrant worker taskforce earlier this year, the government has started drafting legislation to where underpayment is “clear, deliberate and systemic”.

However, Mr Burke said Labor wants a system in which wage theft is uncovered quickly and workers are repaid swiftly, calling for a wide-ranging parliamentary inquiry into this issue.

He said it would examine: the reasons for wage and superannuation theft; the cost of wage theft to the economy; the best means of uncovering and deterring such theft; and the taxation treatment of those affected.

The ALP has given notice of a motion to refer to the Senate Economics References Committee an inquiry into “the extent and amount of unlawful underpayment of employees’ remuneration by employers”, for report by June 2020.

The motion made requested the inquiry investigate the extent and amount of unlawful underpayment of employees’ remuneration by employers, with particular reference to:

(a) the reasons for wage theft and whether it is regarded by some businesses as ‘a cost of doing business’;

(b) the cost of wage and superannuation theft to the national economy;

(c) the best means of identifying and uncovering wage and superannuation theft;

(d) the taxation treatment of people whose stolen wages are later repaid to them;

(e) the most effective means of deterring wage and superannuation theft; and

(f) any related matters.

The announcement follows the Attorney General and Minister for Industrial Relations inviting submissions on a discussion paper on the penalties for underpayment of wages released in September.  The Australian Chamber of Commerce and Industry, of which AMMA is a member, disagreed with the Government’s review of penalties, rejecting the imposition of criminal penalties.

Instead, the Chamber called for measures such as more FWO inspectors and a more targeted focus on employer education and the low-paid.

Fair Work Ombudsman’s advice

Fair Work Ombudsman Sandra Parker said an investigation in relation to Woolworths’ self-disclosure will be conducted to hold them to account for breaching workplace laws.

Ms Parker expressed frustration and said that the non-compliance identified within many of these companies is caused by ineffective governance combined with complacency and carelessness toward employee entitlements.

“If companies do not prioritise workplace compliance from the outset, it can take significant resources and time to fix, particularly where companies do not have accurate records of times worked and wages paid. It is not surprising that workers lose trust in their company when this happens,” Ms Parker said.

Ms Parker reminded business of the broader reputational risk of breaching workplace laws, which can have a lasting impact on the bottom line.

“We encourage corporates to cooperate with us to rectify breaches, but they must understand that admission is not absolution. Companies should expect that breaking workplace laws will end in a public court enforcement outcome,” Ms Parker said.

“I intend to take this issue up with Boards around the country, because frankly that is the level within organisations that should be taking an active leadership role on this issue, and seeking assurance about compliance from executive managers.”

“Companies and their Boards are on notice that we will consider the full range of enforcement options available under the Fair Work Act, including court enforceable undertakings and litigation where appropriate,” Ms Parker said.

AMMA’s position

AMMA position on underpayment penalties, aligned to that of the broader business community, is that introducing criminal sanctions into the industrial relations system is far from ideal.

It is clear from the large numbers of employers that self report underpayment of wages that a significant proportion of non-compliance is driven by Australia’s employment laws being unnecessarily complex, in particular the industrial awards system.

AMMA’s future vision for industrial relations in Australia, as detailed in A New Horizon: Guiding Principles for the Future of Work  includes a significantly simplified safety net that abolishes the awards system in favour of universal minimum standards of employment and adequate protections for those who may be in need.