‘Like torture’: Australia’s wage theft epidemic runs deeper than recent headlines

Migrant workers are particularly vulnerable to underpaying employers.

Migrant workers are particularly vulnerable to underpaying employers. Photo: Getty

When Tiff Tan left to work in Australia she was eager to hone her craft, improve her English and support her parents in Malaysia.

But when she arrived, Ms Tan says she was underpaid by multiple employers, with Melbourne fusion eatery Hochi Mama effectively paying her less than $5 per hour.

Fearful of losing her visa, she says she worked excessive hours for a flat weekly wage.

The experience had a profound effect on Ms Tan, now 40.

“It’s scary, like torture. You will get anxiety every night, have nightmares, worry too much,” she told The New Daily.

“People have nowhere to go, they don’t have friends or family here. They have to face this on their own. That was my experience.”

After taking action through her union and being repaid $9000, Ms Tan now mentors and advocates for workers facing similar treatment – and there are many.

A 2019 KPMG report put the annual figure for wage theft at more than $1.35 billion and estimated as much as 13 per cent of the total workforce has been affected – more than a million people.

Migrant workers are particularly vulnerable as their bosses have power over both their pay cheque and their residency status.

As Migrant Workers Centre director Mathew Kunkel put it: “It takes a very courageous person to make a complaint against the person who is your anchor to the country.

“People feel they should put up with abuse because they might find a set of circumstances in future where they have a different boss.”

Mr Kunkel said most people think wage theft only occurs on farms, cafes and in the gig economy.

“But we’ve seen people in factories, construction workers, telecommunications workers – people in every sector of the economy reporting that they are denied their legal entitlements,” he said.

That said, the hospitality industry has seen a particularly high number of wage theft scandals.

Tiff Tan said she was paid less than $5 per hour at Hochi Mama in Melbourne. Photo supplied

The many faces of wage theft

A 2017 survey by hospitality union, Hospo Voice, found three in four workers in the sector had reported being underpaid at one time or another.

The most common complaints were illegally low cash-in-hand wages, a failure to pay penalty rates, and the replacement of hourly rates with a lower annualised salary.

It is legal in hospitality to substitute hourly pay for a flat salary if it leaves a worker better off, but employers must conduct annual reconciliations to make sure that this is the case.

Advocates say some employers pay an annualised salary, but fail to run these reconciliations – effectively pocketing the difference.

For newer business models, the tactics are different.

Some companies class ride-share and delivery riders as independent contractors – separate businesses who enter a partnership with platform owners – and are not subject to laws governing employment.

This results in effective pay rates well below the legal minimum and no access to compensation if workers are injured.

It’s a lucrative, if high-risk, approach for companies.

When Foodora rider Josh Kluger ran a successful unfair dismissal case that established he was an employee, the company closed its Australian operations.

George Calombaris’ restaurant empire collapsed after wage-theft revelations. Photo: AAP

“Errors and oversights”

Underpayment by celebrity chefs and farmhouse horror stories have grabbed recent wage-theft headlines, but the issue has long plagued some of Australia’s largest employers.

This week alone, revelations of historic and ongoing wage theft by Coles, Target, Super Retail Group and Officeworks have emerged.

The Shop, Distributive and Allied Employees’ Association (SDA), which represents workers in the retail industry, told The New Daily it predicted many more underpayment cases to emerge over the coming months.

In the finance industry, the Commonwealth Bank is making an estimated $53.1 million in back payments after a 2018 review identified both over- and under-payments.

The Finance Sector Union said some underpayments were the result of “flexibility arrangements” which allow parts of the enterprise agreement to be set aside in return for higher pay – so long as annual reconciliations take place.

CBA declined to say how often it conducted these reconciliations.

Talking tough

The avalanche of underpayment cases and their prominence in the public consciousness has prompted the Coalition to contemplate new criminal sanctions for worker exploitation.

Federal industrial relations minister Christian Porter circulated a discussion paper on Thursday that included proposals requiring businesses to “name and shame” themselves as perpetrators of underpayment, and criminal penalties for the most severe forms of wage theft.

Mr Porter has been moved to address the wage theft epidemic. Photo: AAP

The paper also canvasses banning offenders from sitting on boards or running businesses, strengthening the compliance powers of the Fair Work Ombudsman, and introducing a small claims process to recover unpaid wages. Affected workers are currently required to go through the Federal Court.

Some business groups have argued that the proposals would act as a 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,” AIGroup CEO Innes Willox said.

Restaurants and Catering Association CEO Wes Lambert told The New Daily that there was no excuse for underpayment, and that he wanted to work with all sections of the industrial relations community to simplify the compliance burden for business owners, most of whom he says are trying to do the right thing.

“Complexity of award arrangements and a lack of education resources for business owners are the key drivers of award non-compliance,” Mr Lambert said.

“[We] believe there is a strong public policy argument for simplifying the award so employers and employees can better understand when payroll is done correctly, and more importantly when it isn’t,” he added.

Unions argue that what’s needed is the restoration of powers for workers’ representatives to access time and wage records in greater numbers than regulators can.

“Wage theft has become a crisis because unions have been blocked from conducting spot checks and the legal system is stacked in favour of employers,” ACTU secretary Sally McManus told The New Daily.

“The discussion paper does not address the root causes of wage theft, it will not allow unions to do spot checks, it imposes [court filing] fees on workers trying to get their money back and will override stronger and better state systems,” she said.

There are also concerns among advocates that criminal charges contain a high burden of proof and will only apply where negligence or pre-meditation can be proven.

For Ms Tan, whose early experience of Australia was coloured by wage theft, the right solution is vital.

“Everyone makes mistakes – big and small. But [wage theft] isn’t a mistake – we didn’t get paid. It’s a lot, and it’s everywhere. The people and the government must work together to solve this.”

Lachlan Williams is a freelance journalist and communications consultant. He has previously worked for the ACTU.


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