It’s criminal – so why are so many companies using wage theft to pad their profits?

Queensland is leading the way in the battle to tackle wage theft, but making the practice a criminal offence hasn’t necessarily made a big difference, writes David Fagan.

Jan 16, 2023, updated Jan 16, 2023
Despite the Queensland Government introducing new criminal against wage theft, the practice has continued unabated.(Photo: AAP Image/Michael Dodge

Despite the Queensland Government introducing new criminal against wage theft, the practice has continued unabated.(Photo: AAP Image/Michael Dodge

Few things illustrate the effectiveness of a law better than its use to right wrongs.

One of the great wrongs exposed in the past decade has been the rorting by employers (large and small) of the salary entitlements of their staff. By some estimates presented to various parliamentary committees, well over a million Australians have been the victim of “wage theft” by their bosses who rely on them to make, sell or deliver their product.

The response, as is often the case, has been tougher laws to both catch and penalise those who deliberately do the wrong thing.

Since 2021, both Queensland and Victoria have made “wage theft” a criminal offence, putting employers who deliberately do the wrong thing at risk of a criminal record, maybe even a prison offence. Anthony Albanese has promised to match these laws nationally to combat what the government says is a $1billion problem.

This is a threat guaranteed to concentrate the mind. It should be enough to force managers and boards of directors to proactively check their employees are being correctly paid.

The outcome so far. On the criminal side, very little. Victoria has taken one criminal case to court; Queensland, despite its tough talk, has prosecuted none. (By comparison, Queensland has prosecuted 120,000 people in its first year for using a mobile phone while driving, an offence made easier to detect with the help of a big brother network of cameras and the lure of a $1000 fine for each successful prosecution).

So what’s the point of the criminal penalties if they’re not used?

In Queensland’s case, there’s an argument the threat of them is successful window dressing which has drawn attention to the moral, if not legal, crime of ripping off your employees. And it has been accompanied by other legal changes that make it easier for a wage theft victim to pursue remedy either through the civil courts or the industrial relations system.

Most victims of wage theft are vulnerable – often they’re young, often they’re migrants who don’t understand their entitlements and speak English only as a second language. Sometimes, the perpetrators also fall into that category – small or start-up businesses “bootstrapping” their way to viability by cutting corners on employee entitlements.

Lawyer Miles Heffernan of Fair Work Claims Today, who has taken an active role in both shaping the Queensland laws and using them for vulnerable clients, believes they have been effective despite the lack of criminal prosecutions.

“The courts have worked to build processes that help efficiently deliver the intent of the law and victims are seeing better monetary outcomes when they are wronged,” he said.

“But the threat of being caught is also seeing the design of better payroll processes that ensure people are paid properly. This is particularly the case with larger employers of 50 or more people but the problem still remains in the small employer category.”

From my observation, this extends across the hospitality area when non-unionised and young workforces pump out the coffees and muffins that fuel our early mornings. This includes deliberately breaking or cutting short rostered shifts so meal breaks aren’t required or just simply paying young employees who know no better in cash. This is borne out by a recent Fair Work Commission snap audit across the Brisbane food sector which found 75 percent of operators were less than fully salary compliant.

The coming deluge will be in the superannuation system where the threshold to be eligible for super guarantee payments no longer applies – but tens of thousands of young people don’t know (and often don’t care) that they’re entitled to an extra 10.5 percent of salary to fund a distant retirement.

It’s unlikely, under either the Victorian or Queensland laws, that either of these reach the legislated criminal standard of behaviour which requires proof that the employer understood and actively perpetrated a wrong.

So this raises the question of whether creating criminal penalties, as distinct from the naming and shaming that goes with other legal processes, is really worth it.

The real impact of naming and shaming should be seen with the big corporations pinged for abuse of salary entitlements – among them 7-Eleven, Pizza Hut, Woolworths, the Commonwealth Bank and Bunnings. Remedies have been sought and delivered under civil and workplace law.

But there is no evidence that consumers have delivered the justice that speaks loudest – by taking their spending power elsewhere. That would be the penalty that hurts most and, more than any law, guarantees an end to exploitation.

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