Criminal penalties for underpayments are not in anyone's interests

"Today's announcement by the Attorney General that the Government intends to shortly introduce legislation into Parliament providing for 'significant jail terms and fines' for employers who engage in serious underpayments, is concerning. While the legislation will reportedly be targeted at serious and deliberate conduct, it will undoubtedly act as yet another major barrier to employment. Small business people in particular will be much less likely to take on their first employee, or additional employees, when they will worry that underpayments could lead to lengthy jail terms," Ai Group Chief Executive, Innes Willox, said today.

"While at first glance, criminal penalties might seem like a good idea, there are many reasons why criminal penalties are not in anyone's interests:

• A criminal case would not deliver any back-pay to an underpaid worker. Where a criminal case is underway, any civil case to recoup unpaid amounts would no doubt be put on hold by the Court until the criminal case is concluded. This means that underpaid workers could be waiting years for back-pay.
• Implementing criminal penalties for wage underpayments would discourage investment, entrepreneurship and employment growth.
• Civil penalties for underpayments were recently increased by up to 10 times and penalties for breaches of pay record requirements were increased by 20 times. This already provides an effective deterrent.

"If the Government proceeds with legislation to implement criminal penalties, despite industry's strong objections, it is critical that the criminal penalties are balanced and only apply to deliberate, dishonest, systematic and serious conduct.

"In addition, to the announcement about criminal penalties, the Attorney General has today released two further discussion papers - one on strengthening protections for wages and entitlements, and another on the Building Code. Ai Group will carefully consider the issues raised in these discussion papers and make detailed submissions ahead of the 3 April 2020 deadline," Mr Willox said.


Ai Group October 2019 submission on the Attorney-General's Dept discussion paper: Improving protections of employees' wages and entitlements: Strengthening penalties for non-compliance 


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