Criminalising wage theft first on IR agenda

David Marin-Guzman

Sep 19, 2019

AFR

Industrial Relations Minister Christian Porter will release a discussion paper on Thursday to determine the threshold for criminal sanctions for underpayments after the government said that significant jail time is necessary to deter further cases.

The Morrison government has prioritised criminalising wage theft as the first of its industrial relations reforms and has raised the prospect of up to 10 years’ jail time for the most serious cases.

“The government considers it unacceptable that there is a persistence of underpayment and exploitation behaviours by a small number of employers and considers there to now be a strong case that the current penalty, compliance, and enforcement framework … needs to be improved,” the discussion paper says.

The paper follows recommendations earlier this year from the migrant worker taskforce, chaired by Allan Fels, that found strong evidence of systematic and deliberate underpayments by some employers.

No decision has been made about the level of criminal penalties but the government said that jail terms and fines must be broadly proportionate with penalties for comparable offences.

Comparisons highlighted in the paper include general theft offences punishable by a fine or five to 10 years’ prison and the Fair Work Act’s “corrupting benefits” provisions that attracts a 10-year jail sentence.

The paper asks when should criminal penalties apply to underpayments and whether other serious types of exploitation should also attract criminal penalties.

Business is against bringing criminal penalties into the industrial sphere and federal Labor opposed the move during the last federal election.

Mr Porter said the government was committed to “introducing strong and effective criminal sanctions to help stamp out deliberate and systematic wage theft by Australian employers”.

“These new criminal penalties should rightly apply only to the most serious types of offending where there is clear evidence of persistent or repeat offending, or offending on a significant scale,” he said.

Despite the Coalition government increasing the maximum level of fines for underpayments in 2017, the paper will also review existing penalties.

Mr Porter said the government had engaged in a consultative process to “ensure that any new penalty regime is fit for purpose and avoids any unintended consequences”.

“For example, we do not want employers who make genuine mistakes and move swiftly to rectify them to end up with a criminal record.”

The paper also proposes strengthening sham contracting laws, where employers unlawfully treat an employee as an independent contractor to avoid paying minimum wages and conditions.

The government has suggested higher penalties for more serious or systemic cases of sham contracting and amending the test of “recklessness” when determining liability.

Submissions are due by October 25.

Final reforms must satisfy three criteria, namely promoting jobs and wage growth, improving productivity and growing the economy.

The government has also said it will be considering reforms to enterprise bargaining, small business unfair dismissal laws and the building code.

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