Small business ombudsman Kate Carnell said the vast majority of small businesses did the right thing by their workers, but said it was also time for governments and big business to “account for the full cost of wages” when they put jobs out for tender.
“A big supermarket, government department… they shouldn’t take a bid that can’t show they are paying appropriately,” she said.
Australian Security Industry Association chief executive Bryan de Cairs said organisations had to take responsibility when hiring security contractors.
“In order to win contracts, we’ve seen people trying to reduce their margins,” he said.
Mr de Cairs said his sector had seen a “race to the bottom” where security contractors had become “more and more creative” in order to make a return.
The peak body urged its members to comply with workplace laws and said it was time for a national policy on labour hire registrations to eliminate inconsistencies between the states.
Australia’s business community has largely welcomed the recommendations, though there is not widespread agreement on the idea of criminal penalties.
“Wage compliance should be a non-negotiable across the board. Given that 33 per cent of Australian small businesses are owned by migrants, many of which don’t speak English as their first language, it’s important that the report’s recommendations on education and information are strongly followed up,” chief executive of the Franchising Council of Australia, Mary Aldred, said.
The National Farmers Federation suggested criminal sanctions were “absolutely appropriate” when deliberate exploitation was uncovered.
Australian Industry Group chief executive Innes Willox said in a statement that the threat of criminal action would “discourage investment, entrepreneurship and employment growth”.
The employer group argued introducing criminal penalties would not result in recovering underpayments because any civil proceedings against an employer would have to be put on hold until after criminal proceedings had concluded.
The government has supported the recommendation, with Ms O’Dwyer saying exploitation of workers is illegal and hurts Australia’s global reputation.
“Only the most serious and egregious cases would be subject to criminal penalties, not employers that accidently or inadvertently do the wrong thing,” she said in a statement on Thursday.
Emma is the small business reporter for The Age and Sydney Morning Herald based in Melbourne.