The Closing Loopholes Review is due imminently, but the Wage Theft Inquiry has already given us insight into the government's thinking
The long-awaited tabling of the Closing Loopholes Review will have far-reaching consequences for workplace relations for the next 2-3 years. But one issue on Amanda Rishworth’s desk has received more attention than perhaps any other in the 400-plus page review - wage theft.
The federal inquiry into Australia’s wage theft framework, which emerged in parallel with Closing Loopholes, handed down its findings on 25 June. The results were chastening.
Nationally, wage and superannuation underpayments drain billions of dollars from the Australian economy every single year. The education and training sector was the biggest offender with $68.8 million recovered by the Fair Work Ombudsman, followed by retail trade on $59.9 million, then mining with $54.9 million, and finally health and social assistance on $36.1 million.
The Senate report emerged because the Fair Work Ombudsman has received zero referrals for criminal prosecution. It should be noted that
Still, the fact that the number is somewhere between zero and one raises the question of whether the laws were adequately drafted or enforced. Recommendation 3 from the inquiry suggested the Federal Government look at focusing FWO’s efforts in part or in full on civil proceedings, which have a lower burden of proof.
While the Senate report is not binding in any way, it did give an indication of what the major parties thought, which is a leading indicator for how the Closing Loopholes Review will land. Labor government Senators and the Greens indicated they were broadly comfortable with the current regime of wage theft protections, while Coalition members called for a simplification of the awards system.
Minister Rishworth received a draft report on 15 June, and the government has 15 sitting days to table it in Parliament. If I’ve read the Parliamentary Calendar correctly, that gives the Minister a theoretical deadline of 20 August.
When you look at the Closing Loopholes Review against the Wage Theft inquiry, one thing stands out beyond the length and breadth. The submissions also speak to the problems HR leaders face when trying to pay their employees correctly within a complex awards system - often amid staff shortages - that were highlighted in the Wage Theft inquiry.
The Australian HR Institute (AHRI) said it was essential to equip line managers with the capability to apply the rules of the complex awards system, noting Australia’s payroll capability didn’t stack up well against other OECD nations.
The Australian Chamber of Commerce and Industry (ACCI) highlighted the "complexity, uncertainty and rigidity across the workplace relations system", while the Australian Industry Group criticised the transition away from clear, contract-centred definitions, creating a "compliance time bomb" for industry.
For smaller companies, the Council of Small Business Organisations Australia (COSBOA) said a third of small business owners had limited knowledge of casual employment definitions.
I’m a co-founder of a New Zealand workplace management software company, and we recently expanded to Australia. While a $12 billion problem under the banner of wage theft looks unconscionable for the country of the ‘fair go’, I can tell you the issue is prevalent in New Zealand as well.
The root cause of these eye-watering recoveries, in my experience, is rarely deliberate exploitation. In Australia’s disability and healthcare sectors, for example, the definition of "sleepover provisions" under the SCHADS award has caught out some stretched, well-meaning HR departments.
That's not to say there are no at-risk groups – particularly students and migrant workers – where wage theft is fairly consistently just that: theft. Efforts to stamp out that kind of exploitation should be strong, but targeted.
In the absence of targeting, HR leaders will have to work within the confines of the system as it is. They will also need to prepare for the potential of civil penalties for wage theft, which will surely mean the number of prosecutions forthcoming will be a lot higher than zero.
Rhys Greensill is Co-Founder of workforce management company Simplifi
