Call to make wage theft an ‘anti-competitive practice’

Kirsten Baker, owner of Finders Keepers Cafe in Hawthorn, Melbourne.

Kirsten Baker, who owns Finders Keepers Cafe in Hawthorne, Melbourne, said businesses paying workers “under the table” were saving on the costs of wages, superannuation, workplace insurance and tax.

“The anti-competitive nature of wage theft doesn’t just stop with the underpayment of staff,” she said. “And it limits our potential to expand within the hospitality industry because we are putting our funds into running our business legally.”

However, professor Alan Fells, who chaired the Federal Government’s Migrant Workers Taskforce, said he was not convinced that consumer law was the best option for addressing wage theft. His taskforce recommended stiffer penalties, including jail terms, for wage theft.

“I’m very sympathetic to the idea of making wage theft a criminal offence in very serious cases and in general, applying much stronger penalties and enforcing the law much more vigorously,” he said.

“But I wouldn’t like to characterise it as an anti-competitive offence. I would just treat it as theft.”

Professor Allan Fels says implementing the recommendations in the report would make a significant difference to foreign workers.

Professor Allan Fels says implementing the recommendations in the report would make a significant difference to foreign workers.Credit:Alex Ellinghausen

Australian Industry Group chief executive Innes Willox said very heavy penalties under the Fair Work Act already apply to employers that deliberately underpay their employees and the Fair Work Ombudsman “is a well-resourced and effective regulator”.

“In 2017, the penalties under the Fair Work Act for underpaying staff and failing to keep correct pay records were increased by up to 20 times. These higher penalties are only now starting to work their way through the courts. There is no need for the issue to be dealt with under other legislation such as the Crimes Act or the Competition and Consumer Act,” Mr Willox said.

“The characterisation of underpayments as ‘theft’ is misleading, inappropriate, and has the potential to unfairly brand every failure to correctly calculate an employee’s pay as criminal. Many instances of incorrect payment are a result of misunderstandings or errors due to honest mistakes.

“Exposure to criminal penalties, including imprisonment, for underpayments would discourage investment and employment”.

Anna Patty is Workplace Editor for The Sydney Morning Herald. She is a former Education Editor, State Political Reporter and Health Reporter. Her reports on inequity in schools funding led to the Gonski reforms and won her national awards. Her coverage of health exposed unnecessary patient deaths at Campbelltown Hospital and led to judicial and parliamentary inquiries. At The Times of London, she exposed flaws in international medical trials.

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