Prime Minister Scott Morrison has put employers on notice that those who exploit workers may soon face criminal penalties, after a company whose directors include celebrity chef George Calombaris was fined for underpaying staff $7.8 million.
“Right now, the Attorney-General is drafting laws to deal with criminalising worker exploitation,” Mr Morrison confirmed during parliamentary question time on Wednesday.
Industrial Relations Minister Christian Porter – who is also the Attorney-General – said criminal sanctions would send “a strong and unambiguous message to those employers who think they can get away with the exploitation of vulnerable employees”.
Earlier, he described a $200,000 contrition payment Calombaris’ company MADE Establishment had been ordered to pay as a “light” penalty.
Former ACCC chairman Allan Fels, who chaired the taskforce set up in response to the 7-Eleven underpayment scandal exposed by the Sydney Morning Herald and The Age, welcomed the Prime Minister’s commitment and called for hefty penalties.
“There should be the real prospect of jail sentences … in sustained, substantial and intentional cases,” Professor Fels said.
“Nothing less would attack a systematic breakdown in our wage payment system.”
He rejected claims that such exploitation could be accidental.
Mr Porter said the government’s new measures aimed to “protect vulnerable workers and ensure law-abiding Australian employers are not undercut by unscrupulous competitors”.
The minister will consult on the legislation with unions and employers “over coming months” as part of his broader review of the nation’s industrial relations system.
He will face heated opposition from employer groups – who argue that criminal penalties will discourage investment, entrepreneurship and jobs growth – while unions want further changes to make it easier for workers to pursue underpayment claims.
Labor’s industrial relations spokesman Tony Burke urged the government to ensure that strong penalties applied to the worst offenders.
“If you have something that is knowingly, deliberately underpaying people, then I don’t see how it should be any different from the worker taking money from the till,” he said.
It is expected that the new legislation will only criminalise underpayment found to be “clear, deliberate and systemic”, as recommended last year by the Migrant Workers Taskforce.
The taskforce also called for penalties imposed on employers who underpaid workers to be brought in line with consumer laws – which impose fines on law-breaking corporations ranging from $10 million to 10 per cent of annual turnover.
Australian Industry Group chief executive Innes Willox said “the vast majority of employers” did not underpay staff and most underpayments were the result of “genuine errors”.
He said criminal cases “would not deliver back-pay” to underpaid workers, whose civil cases would likely be “put on hold until the criminal case is concluded”.
ACTU President Michele O’Neil said workers needed “swift access to justice”.
“Even when action is taken in the courts, it’s a long and expensive process,” she said.
“Workers should be able … to take underpayment and wage theft to the Fair Work Commission.”
Deloitte partner and former Fair Work Ombudsman Natalie James said the Calombaris case should serve as a warning that businesses could not afford to be lax about their legal obligations.
“If it wasn’t already clear, the events of last week show that business can’t afford to take a ‘set and neglect’ approach to HR and payroll,” Ms James said.
“The community and their employees and customers expect them to get this right. With large businesses identifying legacy underpayments, no company should think itself exempt from the risk.”
Victoria, the only state with plans to criminalise wage theft, will begin consulting on the reform next month.
Victorian Attorney-General Jill Hennessy said work was under way on legislation and that the government would be talking to workers, unions, employers, community legal centres and academics.
“Wage theft in the hospitality and retail industries is outrageous,” Ms Hennessy said.
“The existing legal regime has failed to prevent the exploitation of Victorian workers by unscrupulous employers.
“Bosses who deliberately rip off their workers should go to jail.”