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Disqualifying directors and forcing companies to publicly disclose underpayment offences are among some of the measures currently being considered by the Industrial Relations Minister to tackle worker underpayment.
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Attorney-General floats naming and shaming penalty for wage theft
19 February 2020
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10 minute read
Attorney-General and Minister for Industrial Relations Christian Porter today released a discussion paper exploring further changes to tackle worker underpayments.
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The paper comes ahead of legislation to criminalise the worst cases of underpayments and worker exploitation with significant jail terms and fines.
Apart from disqualifying directors of companies where significant underpayments occur, the paper also flagged the option of issuing adverse publicity orders that force companies to disclose or publish their offences.
The paper also proposes issuing banning orders to prevent companies from employing migrant workers for a prescribed period.
‘Employers fail due to complexity’
The latest development comes as the Economics References Committee looks into the causes, extent and effects of unlawful non-payment or underpayment of employees’ remuneration
In its submission to the parliamentary committee’s inquiry, Chartered Accountants Australia and New Zealand (CA ANZ) has called for a distinction between deliberate underpayment of wages and accidental or mistaken underpayment of wages due to the complexity of the awards system.
It noted that while the Fair Work Commission has done a “great job” with replacing 1,560 state awards with 122 modern awards, the current system still continues to be a stumbling block for employers.
“Some of our members have expressed their frustration with the number and complexity of modern awards in Australia,” CA ANZ said.
“A consequence of the complexity and lack of integration of the industrial awards systems, combined with the various tax and other regulatory systems associated with employment, is that many employers fail.
“Many employers trying to do the right thing by employees fail not due to intent or negligence but due to complexity.”
Further, CA ANZ argued that employers who have committed accidental underpayment are often afraid to raise it with the Fair Work Ombudsman due to fear of reprisal.
“Our members have shared their experiences and often frustrations when dealing with the FWO. In particular, the inability for the FWO to provide advice or confirmation of awards, including in areas where the legislation is unclear or contradictory,” CA ANZ said.
“Some of our members have also noted that it can sometimes be difficult to proactively work through and resolve issues with the FWO. This has resulted in businesses being hesitant to raise issues with the FWO when they are discovered.
“It is important for the FWO to continue to encourage self-reporting by organisations, including working collaboratively with business to identify and rectify issues without fear of negative consequence.”
STP
The professional accounting body also believes an expanded Single Touch Payroll regime could help address underpayment of worker entitlements.
With PAYGW and superannuation liability information now being reported in real time to the ATO, CA ANZ believes it would “make sense” to extend STP to include state-based payroll tax and workers’ compensation insurance information to assist in the minimisation of regulatory reporting by employers.
“We consider it would also make sense for Single Touch Payroll to include information about which award applied to the employee,” CA ANZ said.
“This would provide a data point from which regulators, such as the FWO, could more easily check if entitlements were being met without needing to intrude in a more time-consuming way on those who operate the business.”
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