Fair Work: One in five businesses busted for wage theft

By Leith van Onselen

More than one in five businesses audited by the Fair Work Ombudsman (FWO) across three states have been found to have underpaid workers, with employers forced to backpay over $580,000 to nearly 1000 employees. From The Australian:

Fair Work inspectors found widespread noncompliance with workplace laws after auditing 1385 businesses in regional Queensland, New South Wales and Victoria.

Accommodation, hospitality and retail sectors were a focus of the investigation.

Inspectors found 22 per cent of audited business failed to pay their employees correctly, 15 per cent were in breach of non-monetary obligations by not providing proper pay slips or keeping proper employment records, and six per cent failed to pay their employees correctly and meet their non-monetary obligations.

The most common breach of workplace laws was the underpayment of the minimum hourly rate, with inspectors also uncovering underpayment of overtime and penalty rates. The ombudsman recovered an average of about $600 per underpaid employee…

In 2017, the FWO revealed that migrant workers were involved in more than three-quarters of legal cases initiated by the FWO against unscrupulous employers. Whereas last year it was revealed that nearly three-quarters of businesses in the hospitality industry audited by the FWO across Melbourne, Sydney and Brisbane had breached workplace laws.

Thus, the wage theft issue is embedded most deeply in the migrant community. This is part cultural but also structural. Given many migrant workers are vulnerable while they are looking to rack up their years to apply for permanent residency, they are not going to report being underpaid. This is most poignant in those business models in which labour has become a profit centre because workers are effectively paying bosses to sponsor their visas.

Policy makers know the problems, but refuse to take concrete action. Wage theft and low wages growth are a feature not bug of the immigration-led economy.

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Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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Comments

  1. Partly the result of a vulnerable workforce (immigrants), but also due to a minimum wage that’s too high.

    The only alternative in some of these cases is to pack up shop, because they can’t make ends meet by paying the right amount

    • Min wage as ti is does not provide much of a living with Aus high cost of living. Particularly housing. Perhaps employers should concentrate on how they are paying too much rent themselves (to a worthless bunch of government favoured parasites) ie; we have some of the highest commercial premises rents in the world.
      Lots of these businesses that are not paying proper wages are raking it in and are just plain greedy.

  2. The food retail and hospitality industries are the biggest problem here since they’re always the ones which rely on cheap labour to survive. The biggest source of the cheap labour is the fake international students who supposed to work less than 20 hours / week as their visa condition but most of them violate them to earn some money. So, they get the works but they have to take the below minimum wage rate as cash payment – win win situation with the employers. The trend to minimize / remove any class attendance in the university also work well for the enterprising students. Many classes now allow access to online recorded lectures and assignments can be done / submitted using emails.

    We should just ban any employment for international student visa condition since this condition is the one driving wage abuse along with the usual temp visa like the 457 visa.

    • Or this is a symptom of a larger problem – a minimum wage that’s too high.

      If they had to pay full minimum wages, many of these places would shut down.

      • Yes. Sort of. But the core problem is land is overpriced, and thus rents are too high.

        If everyone goes bust because rents are too high eventually landlords will have to cut rents which will then also cause land prices to fall. So they don’t want to do it. But it’s the reset we need. It only happens after a proper f#cking crash though.

      • A2 – right again. It is not as if anyone is arguing that those on the minimum wage are on easy street, many are the working poor. Sure, drop the minimum wage but only once basic living costs, like energy and housing, have been cut back

      • If minimum wages were cut they would still be too high for some places and then what do we do, cut them again? Eventually all service jobs would be performed by pseudo slaves from the sub-continent or africa for two dollars a day (so Gina would be happy at least, and even fatter). What really needs to happen is fair work needs to start handing out serious jail terms and fines so that businesses that pay the legal wage are not disadvantaged.

    • 100%! Im a chef, love my job and work my ass off. I have always worked in the higher end of the game, now I go for the money. Since moving here in 1998 I have seen dramatic changes in my industry. Form 457 to the now student visa, ALL are for one thing. An erosion of wages. We have this record youth unemployment and underemployment issue facing us today, the later across the age demographic. The 457 and student visa system is a 100% of the problem in this area, allowing employers to hire desperate yet hard working individuals. This takes away the opportunities for our youth to “Have a go” or get their foot in the door, with my current establishment having 10 of these “student visa” staff on hand. Don’t get me wrong, I love who I work with and ALL of them work there asses off. Its also great to get a great way to embrace other cultures in our Australia…..But at the cost of our own children, whom not all will turn out to be Lawyers.

      • Niether side of government seem to understand this. Both of them want high immigration. LNP to keep house prices high and to feed the profits of such busiensses

  3. Hanno Son of Bomilcar

    comes as no surprise to anyone not naive enough to believe that wage awards would actually be respected, especially australia’s insanely high ones.

  4. Meh. The minimum wage is excessive and destroys jobs for the young. What do you expect to happen?

    • Nah. Labour costs are ok. It’s land and energy costs we need to deflate – and especially land. See above.

      • Labour costs can’t be okay if determined by a bureaucrat. It’s economically impossible.

    • Andrew a ideology says yes but reality says no. If you leave wages to “the market” then the power imbalance between big business and the worker is too great. The worker gets screwed every time. A fair work commission setting a minimum wage is there to rein in the excesses of an unregulated system.

      Looking at how many businesses already cheat on wages, you cant convince me that giving businesses full and unregulated power to set wages will end well.

  5. We are barely scratching the surface. Wait until you see unpaid overtime in professional jobs.

  6. kiwikarynMEMBER

    They should just do what they do in NZ – pay the full wage to the worker, then the worker pays back half their wages to the employer in cash, as payment for their visa sponsorship.

    • Systemic in Australia.
      Not just the among the 1.85 million TR we have allowed in but also the 660,000 NZ SCV –
      (2.561 million TR/NZ SCV in total in Australia now. March 2019 VisaSure / DHA ABF)

      Of the 660,000 NZ SCV permanently onshore in Australia – over 40% or 264,00 are non NZ born coming in via the NZ backdoor. NZ Stats.
      A decade ago it was only 8% non NZ born SCV here.
      NZ SCV is fastest growing third world unskilled migrant intake spigot into the Australian migrant bathtub.

      “NZ only sells 2 things : milk powder to the Chinese and passport stamps to enter Australia” (Winston Peters)

      Asian / Chinese / Indian / Bangla / Nepal / Fiji Indian / Malay / African / Middle Eastern.
      And a NZ outlet, over 260,000 have done the NZ transit lounge but they now have another 290,000 third world unskilled migrants (last 5 years NZ intake) stacked up in NZ waiting for the stamp.

      And on trend 90% will enter Australia on a NZ SCV to stay permanently. That was always their destination.

      4 years in NZ on a visa alibi & working illegally then get get the stamp & 90% oneway flow into Australia – they can work legally..

      but they are all third world unskilled.

      NZ Family reunion, refugee, ‘foreign student’ with NZ ‘college & institute diplomas’ that are worthless.
      And had 4 years in NZ working illegally.. so like you say – all ‘experienced’ in how to navigate and fit into the foreign run underground economy here.

      So they also end up in foreign criminal run ABN contract hire labour rackets, cash in hand or the usual two timesheets etc.
      Or even if on a legal minimum wage / the Chinese or Indian boss will standing outside the ATM with the third world NZ migrant SCV in getting the cash back.

      Having to ‘pay’ the ethnically aligned agency or ‘supervisor boss’ for a job say $1,000 -$3,000 as ‘introduction & orientation’ for a menial job in say cleaning or Coles shelf stacking is now routine.

      No white Australian or New Zealander will ever be employed by an Indian or Chinese or Malay etc once that person is in a supervisor or hiring role.

      The end of life Asian vice workers pay up to $50k to get in as a NZ student (if they can’t get in as a student or tourist) to enter to work in Australia on course breaks, the pimp & Asian procurers get paid back in 3 months.

      But Karyn – the real NZ born are going back.

      That number is only 396,000 left (of the 660k)
      If that.
      Mostly old from the 1980’s wave onwards.
      Either they took up dual citizenship when it became available, or stayed as NZ sole passport holders & now back to NZ, cash out their Australian super as ‘permanent exit’ – back to suck up the NZ welfare & health care in Wanui or Porirua.

      I haven’t heard the dulcet mangled vowels of a young genuine New Zealand born seeking opportunity in Australia as a new arrival at Australian immigration for years.

      Just plane full of old greyheads going back on the Auckland flight & a flood of non NZ born third worlders Asian Indian & others on the plane back to Sydney to queue up & present their freshly minted NZ passport stamps to Australia immigration.

  7. “One in five businesses busted for wage theft” – and 1/2 of the victims votes LIBS in a hope to make the values of their houses great again.

  8. Anecdata point:

    A friend in the hospitality game had a competitor confess to them over some beers that he had never paid any employees super in 30 years.

  9. Jumping jack flash

    yawn.

    replacing your expensive staff with ever-cheaper, casual staff is required if you’re not working in an eminently gougable industry.

    Like hospitality for instance. You can’t gouge a cup of coffee for more than, oh, say, $5.50 for a standard size, otherwise people will just go next door where the coffee is $5.00, but you need to buy more debt to make ends meet. What do you do?

    There’s not a great many options, but the most obvious one is to cut back staff hours and hire some cheaper staff. Or steal wages from employees who don’t know any better.

    One of the companies my wife subcontracts for comes up with clever ways to steal wages. They send out an email and then ask some stupid question. When nobody responds then they withhold payment. When you ask why your invoices haven’t been paid on time they say “oh we sent you an email about *some irrelevant crap* and you didn’t reply so we didn’t pay you”.

    I immediately thought of all the cheap 3rd-world immigrants who barely speak English working for them who would be getting ripped off left right and centre by these pack of arses. There was a good one they pulled at Christmas too. I’m sure they made a nice little Christmas bonus over that technicality.

  10. Luxury car tax is a way of getting some tax out of the wage stealing bosses.

    Lower the LCT threshold to $50k.

    And put in a commercial land tax – offset by any GST paid.