The ACAPMA Board has long campaigned for the illegal and abhorrent practice of deliberate wage theft to be criminalised. The reality of a national criminalisation of wage underpayments is one step closer today, with the Government releasing a consultation paper that is seeking comment on a proposal for criminal penalties and reformed civil penalties for deliberate and reckless underpayments.
ACAPMA has long supported State and Federal Government and Regulator initiatives to address and prevent underpayments. With the backing of the Board this evolved into actively championing the concept of criminalising wage theft.
In early 2020 ACAPMA Board President Wade Death called on the industry to lead the fight against wage theft, “It’s time to lead the fight against wage fraud. We have supported the fight from the wings for long enough. It is time to lead”.
While the previous Federal Governments Omnibus Bill of 2021 included provisions for the criminalisation of wage underpayments, which were met with broad stakeholder agreement and swift passage through the lower house, the fiery debate that ensued in the Senate at the time resulted in the wage underpayment elements being withdrawn by the then Government.
At the time, ACAPMA CEO Mark McKenzie noted that, “The outcome was extremely disappointing, particularly the loss of the new measures designed to increase penalties for wage underpayment”.
Shortly following the decision, the ACAPMA Board formally noted that the failure to pass the wage compliance elements of the Bill sent the wrong message to businesses who engage in deliberate underpayment of wages thereby gaining a competitive advantage over the vast majority of businesses that are doing the right thing and called on ACAPMA to continue to push for its revival.
“Wage underpayment is an extremely significant issue for our industry given that such behaviour provides a distinct competitive advantage in our fiercely price competitive industry and the fact that we are unfortunately portrayed as the poster child of wage underpayment in Australia”, said Mark.
“The anti-competitive and industry reputation consequences of this issue are by no means meant to diminish the moral issues of ensuring that all employees are paid the wages that they are legally entitled to but highlight the fact that this is a very significant issue for our industry.”
It is at this point that it is vital to note the distinction between Underpayment Errors and deliberate and systemic Wage Theft.
Underpayment Errors are the unintended underpayment of wages owing to of making mistakes in payroll. While ignorance of the Australian law is no excuse for non-compliance, the complex nature of our wage and award system means that it is inevitable that business owners will occasionally make mistakes with payroll.
Wage Theft, on the other hand, is the deliberate (often systematic and repeated) underpayment of wages intended to decrease labour costs. This action means that the business is able to gain a competitive advantage over the businesses doing the right thing and is particularly insidious when conducted in an industry with a fierce competitive dynamic – such as operates in the Australian fuel retail industry.
This week the current Government has released a Consultation Paper as part of another effort to enact criminal penalties for wage theft.
The Consultation Paper outlines a series of proposed options and approaches and draws a distinction between deliberate, reckless and innocent underpayments;
Deliberate Underpayments, that the Paper calls Knowledge-based Offences, are where the employer knows they are underpaying an employee. The Paper proposes penalties for Deliberate or Knowledge-based Offences that would amount to either $82,500 per offence for individuals and $412,500 for businesses for standard breaches and $825,000 for individuals and $4,125,000 for businesses.
Reckless Underpayments, that the Paper calls Recklessness-based Offences, are where the employer may not be deliberately underpaying workers, but who understand there is a real risk that their conduct is likely to result in underpayments and choose to proceed with the conduct anyway. The Paper proposes penalties for Recklessness-based Offences that would amount to either $82,500 per offence for individuals and $412,500 for businesses.
“Innocent Underpayments, while not defined by the Paper specifically, would be those that are not a result of a deliberate or reckless action by the employer. For example an error arising out of miss entered pay rates, provided the underpayments are rectified in full. It is important to note that regular system auditing is required to ensure that wages are compliant and failure to undertake these self checks could arguably rise to the level of Recklessness under the proposed system”, explains ACAPMA’s Elisha Radwanowski.
The options being explored in the Consultation Paper, and the submissions from business and union groups and the public, will be used to finesse the final legislative approach to this area.
The Consultation Paper is open for comment until 12 May 2023.
“ACAPMA will be providing a submission to the Department on the Consultation Paper and welcomes Member feedback and commentary”, concluded Mark.
More information
- General Information on the Criminalising Wage Theft Reform – https://www.dewr.gov.au/item-03
- Criminalising Wage Theft Consultation Paper – https://www.dewr.gov.au/2023-workplace-reform-consultations/resources/criminalising-wage-theft-consultation-paper
Elisha Radwanowski BCom (HRM/IR)
ACAPMA
Source: acapmag.com.au/2023/04/national-criminalisation-of-wage-theft-one-step-closer/.
