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Government Crackdown On Wage Theft Not Tough Enough

Government crackdown on wage theft not tough enough

The government’s proposed crackdown on wage theft is not tough enough, according to unions.

The new laws will make systematic and deliberate wage theft a criminal offence, attracting hefty penalties and jail terms.

However, the definition of “systematic and deliberate” will mean criminal charges will be unlikely in most cases.

Furthermore, without providing extra resources for the Fair Work Ombudsman to enforce the laws, the crackdown is even more useless, according to experts.

Government crackdown on wage theft not tough enough

The proposed new penalties make up part of the government’s industrial relations omnibus bill released this week.

Under the beefed-up laws, maximum penalties for “the most egregious examples of genuine wage theft” will be:

  • $5.55 million for corporations;
  • $1.11 million or five years jail for individuals.  

IR Minister Christian Porter was quick to point out the penalties will not apply to “one-off underpayments, inadvertent mistakes or calculations”.

Bar set too high

Australian Council of Trade Unions secretary Sally McManus said the threshold for an employer to commit a crime is set too high.

“It’s got to do with the standard of criminal offence.

“And our understanding is that the standard that’s going to be proposed is one that’s much weaker than already exists in large parts of Australia so it waters down that.

“Basically making it impossible for an employer, even if they do something really bad to face a jail term.

We do not support the high bar set for criminal offences, it is unlikely any employer will ever be caught and it will wipe out stronger and better laws in Queensland, Victoria and the ACT.”

More resources for enforcement

Doctor Stephen Clibborn from the University of Sydney Business school also believes the laws will be ineffective.

He questioned how they will be enforced, specifically in cases involving a large business.

“If you need to prove intent [to underpay], then whose intent? The CEO? The payroll officer? The HR manager? A line manager?

“With those layers and organisations, we’re less likely to see that.”

Doctor Clibborn says the government needs to invest extra resources in enforcement bodies such as the Fair Work Ombudsman.

“What contemporary international and Australian research shows us is that increasing employer compliance is about creating an expectation in the mind of the employer that they will be caught if they do the wrong thing.

“Unless there’s additional reforms related to enforcement [in the full reform package], just increasing fines or criminalising the worst cases of wage theft, is unlikely to do much.”

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