Ai Group strongly opposes the introduction of criminal penalties for wage underpayments. While at first glance, the introduction of criminal penalties for serious and deliberate underpayments might seem like a good idea, there are many reasons why this is not in anyone's interests:
- Implementing criminal penalties for wage underpayments would discourage investment and employment growth. This point is even more compelling in the present economic circumstances where it is essential that no barriers are imposed on investment and employment.
- Exposing directors and managers of businesses to criminal penalties would operate as a major barrier to employers self-disclosing underpayments to the FWO;
- Exposing directors and managers to criminal penalties is particularly unfair given the complexity of Australia’s workplace relations system; and
- Importantly, a criminal case would not deliver any back-pay to an underpaid worker. While a criminal case is underway, any civil case to recoup unpaid amounts would no doubt be put on hold by the relevant Court until the criminal case is concluded. This means that underpaid workers could be waiting years for redress.
The Fair Work Act already includes very substantial penalties for those small minority of employers who deliberately underpay their staff. These penalties were increased by up to 20 times in 2017.
In any event, in Ai Group’s view, it is inappropriate for the Bill to be passed at a time when the Commonwealth Government is undergoing a separate consultation process with a working party of employer representatives (including Ai Group) and union representatives to consider what changes are needed to existing laws dealing with wage underpayments.
The Federal Government has already announced its intention to implement criminal penalties for serious and deliberate underpayments.
The Fair Work Act comprehensively deals with compliance and enforcement matters relating to wage underpayments – inadvertent or deliberate. Therefore, the passage of the QLD Wage Theft Bill would lead to considerable confusion for employer and employees about which laws apply.
The Bill's attempt to label some underpayments as a crime does not change the character of the relevant matter. The relevant matter is: what penalties should apply to employers who deliberately underpay their employees? This issue is comprehensively dealt with by the Fair Work Act – a piece of legislation that is expressly drafted to "cover the field" in relation to wage underpayments for employees and employers covered by the Act.
For the reasons that I have outlined, Ai Group urges the Committee to recommend that the Wage Theft Bill be withdrawn, or at the very least not passed until after the outcome of the Federal Government's consultation process is known.
Media enquiries: Tony Melville – 0419 190 347