EWIN HANNAN
NOVEMBER 6, 2019
The Australian 

Attorney-General Christian Porter has put corporate Australia on notice over the underpayment of workers, saying the directors of companies that fail to pay workers properly could be banned from ­sitting on boards.

Declaring that “corporate Australia has been asleep at the wheel” when it came to ensuring workers were paid correctly, Mr Porter ­revealed the Coalition would consider empowering the Fair Work Ombudsman to pursue banning order applications against directors of underpaying companies.

“I suspect the only way you will get board directors who sit on boards and get 180 grand a year for 12 meetings to take this stuff seriously is if there is something on the line for them,’’ Mr Porter told The Australian.

Mr Porter, also the Industrial Relations Minister, expressed support for an ACTU proposal ­allowing individual workers to go to the commission to have underpayment claims dealt with quickly and efficiently.

He said the government would release in weeks a second discussion paper on wage underpayment that would canvass the “specific options” of banning ­orders and the small claims process inside the commission.

“I have a view now that for a substantial section of corporate Australia, they just don’t get it, and the message isn’t getting through,” he said. “Maybe it’s my background as a prosecutor but I have always believed in the ability of the law to provide deterrence and it’s not doing that effectively at the moment.

“I accept that some awards are complicated, particularly in the restaurant and retail environments, but these are unbelievably very sophisticated organisations — Bunnings, the ABC, Maurice Blackburn, Woolies — and they have huge HR departments.

“If their eye was on the ball, this wouldn’t happen. These organisations have a massive amount of time, energy and resources devoted to ensuring they don’t pay a cent more tax than they have to; they get involved in sporting teams and social issues. If they put commensurate resources into making sure they got their payrolls working in accordance with EAs (enterprise agreements), awards and the law, they wouldn’t be having this problem.”

Mr Porter said since he released an initial discussion paper in September focusing on criminal penalties for wage underpayments, he had established tougher action was needed to ­“ensure corporate Australia takes notice”.

“In some cases, these underpayments date back years. This is just not good enough.”

He said the first priority of any employer — in particular, large employers — was to make sure they paid their staff what they were entitled to. “It would seem some of our biggest companies have dropped the ball and are running out of excuses,’’ he said.

He said directors of companies had a range of responsibilities under corporations and consumer laws. “It would seem reasonable that this list of responsibilities could be expanded to include the responsibility to ensure their company pays its staff correctly,’’ he said. “This would provide the real potential that directors of companies that fail to pay their staff ­appropriately could lose their position and the ability to hold directorships in the future for a period of time. Any such changes would therefore apply to directors of Australia’s largest companies.”

He said the legislation would not be retrospective, meaning the directors of companies that have disclosed massive underpayments would not be affected.

Mr Porter said the small claims process in the commission had been proposed to him by ACTU secretary Sally McManus when they met after he became minister.

“Sally McManus is very keen on it,’’ he said. “I find myself agreeing with her, which makes me want to go and slap myself with cold water in front of the mirror but I think it’s a good idea.”

He said the small claims proposal would address an apparent “gap in the market” and allow individual workers to have their concerns about underpayment dealt with quickly and efficiently.

Under corporations law, ­directors can be automatically ­disqualified in some circumstances, disqualified by ASIC without any court action for certain matters and disqualified by the court through an application from ASIC relating to criminal and civil penalty provisions in the Corporations Act. Under consumer law, directors can be disqualified by the court upon application by the ACCC in relation to certain criminal and civil penalty provisions, but the Fair Work Act does not specifically empower the courts to order disqualification of directors where businesses breach their ­industrial relations obligations.

“We now know what the problem is with enormous clarity, and that is a lot of organisations, who you would expect better from because they are well-resourced, sophisticated, with large HR departments, haven’t been able to self-regulate and self-audit to make sure they are paying employees properly,” Mr Porter said.

He said it was “monstrously unlikely” big companies were underpaying workers deliberately.

“I think this is eye off the ball. It’s not sticking to their knitting. It’s a level of negligence through a failure to devote time, energy and resources to this stuff,’’ he said.