Wage theft is so common, surely it must be ok?

Wage theft..

Type in underpayments in your google search, and example after example comes up of organisations who have been pinged for not paying employees their legal entitlements: think CBA, Woolies, Coles, Qantas.. the list truly does go on..

So far in 2023 we have the example of Mantle Group, a Queensland hospitality group who have been using their 20+ year old zombie agreement to avoid paying casuals penalty rates – and then moved the casuals onto a new agreement that allegedly has base rates that are now below the award. Mantle have said they will be appealing, whilst the union have said they will be referring the HR Mgr to the Australian Federal Police.

Then last week we hear about the Super Retail Group who operate brands such as Super Cheap Auto Pty, Rebel Sport, BCF and Ray’s Outdoors, and have underpaid salaried employees by more than $1 milllion dollars.

According to this article:

But that’s the tip of the iceberg. More than half of Australia’s 40 public universities are facing wage theft investigations; food retailers and restaurants have made headlines, and major banks have been sued.

In 2020-21, the FWC conducted more than 4,000 investigations involving workplace disputes and a further 874 compliance activities in high-risk sectors. As a result of those investigations, the FWC was able to claw back nearly $150 million in unpaid wages for just under 70,000 workers over the financial year, a 20 per cent increase on the amount recovered in 2019-20.

What is wage theft?

This site gives some examples of wage theft:

• Not paying you penalty rates or shift allowances for working weekends or other hours outside your normal workdays or hours. All workers, including casuals and apprentices, are entitled to penalty rates if they work outside specific days or hours.
• Not paying you properly or at all for overtime, or not giving you your rostered days off or days off in lieu. All workers, including casuals and apprentices, should be paid more if they work longer than normal daily hours.
• Unpaid breaks. All those rest breaks you don’t get can really add up. You should be paid overtime or get proper time off in lieu if you miss your breaks.
• Not being paid super. You should receive 10.5% of your earnings in your superannuation account at least quarterly. This money is on top of your other pay. Check your super regularly and make sure payments are coming in, and if you have multiple super accounts, track them down and consolidate them.
• Not paying you for leave: All full-time workers and some part-time workers are entitled to paid personal, annual or long-service leave. And casuals should be getting more pay because generally they don’t get paid leave.
• Not receiving proper allowances. You may be entitled a tool allowance. There are also allowances for meals, managers, travel and special clothing.
• The compulsory use of employer-provided staff accommodation to claw back wages;
• Withholding of wages on the basis that it will put your visa status at risk;
• Not paying for trial or training periods;
• Misclassifying workers as independent contractors;
• Deliberate employee misclassification;
• Not paying appropriately for higher duties;
• Failing to meet basic worker entitlements in family-run businesses;
• “Phoenixing”, where a firm goes into administration or liquidation to avoid having to pay your entitlements, then re-emerges under a different legal structure but with the same or related people in control;
• Inappropriate deductions from your wages such as inflated rent or transport costs;
• Charging you for personal protective gear;
• Paying “all-inclusive” flat hourly or daily rates of pay without regard to specific entitlements
• Failing to deduct or remit taxation amounts;
• Requiring you to pay an “employment bond”;
• Compulsory medicals and drug testing at nominated medical centres with inflated medical fees; and
• Failing to pay for “on call” periods.

Why does this keep happening?

The obvious question is why does this keep happening? These companies should know better .. Organisations such as Qantas, Coles, Woolies have large Human Resources and payroll departments. Much of payroll is automated to ensure compliance with the law, and yet – the examples just keep on coming.

So why? There are multiple reasons ..

• The law is complicated and keeps changing. In the case of Super Cheap Auto, the alleged underpayments relate to employees who are paid an annual salary. Traditionally employers have thought (perhaps hoped), that they could bundle up all the penalties and overtime into one annual salary, cross their fingers and hope it all ends up working out. The law is pretty clear now, that employers need to make sure that those employees who could be covered by an award are being paid at least as much as if they were paid under the award. This is going to bite a whole lot of employers on the bum, particularly as it relates to overtime.
• In other instances, it’s about being competitive. I spoke to one employer who was chronically underpaying her staff, who said that if she paid the appropriate award rates and penalties, she would go out of business, as her competitors certainly weren’t paying those rates.
• Then there are the zombie agreements that were implemented under work choices decades ago, and which some companies like Mantle have continued paying under. You might be surprised about the brands who continue to use these agreements to underpay their staff. The good news is that under new legislation, zombie agreements that haven’t been terminated or extended will automatically terminate on 7th December 2023.

Who is most affected?

It’s unfortunate but the ones who are usually most affected by underpayments are the ones who can least afford it. Often casual employees working in hospitality are the young, migrants and those with English as a second or third language.

What can employees do if they suspect they are being underpaid?

Ask your employer for a copy of your employment contract and the details of any instrument you are employed under  – such as an award or an enterprise agreement.

Sometimes these can be hard to understand, so seek advice from the Fair Work Ombudsman who has both an excellent website and will provide assistance in identifying whether you have been underpaid.

What do employers need to know?

Workplace law can be complicated. If you don’t understand it – then get some good advice. The internet has a wealth of free resources – including the Fair Work Ombudsman. The tolerance for breaking the law in this way is getting less and less. This is particularly the case where a company has access to human resources, payroll and employment law advice.

Remember that the award is the minimum ..

The Takeaway

If you can’t afford to pay the minimum the award states – perhaps your business model isn’t viable.

If you don’t understand your obligations – get some good advice.

If your business model is built off the back of vulnerable employees – consider whether that’s a model worth having.

One other thing to note is that in the Mantle case, the Brisbane City Council is said to be reviewing the leases. And there are fines being issued for non compliance that will quickly eat up any profits made through wage theft.

More Resources..

Fair Work Ombudsman

Sunsetting of zombie agreements 

Reporting wage theft in Western Australia 

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