Unions push for five years’ jail for wage theft

David Marin-Guzman
October 28, 2019
AFR

Unions are calling for employers to face up to five years’ jail or $10 million fines for deliberately underpaying workers as part of reforms being considered by the Morrison government.

The ACTU proposed the penalties in its submission to the government’s compliance discussion paper, where the peak body also argued criminal sanctions should apply to underpayments without proof of intention or negligence.

The ACTU, headed by secretary Sally McManus, says a “strict liability” test should apply for criminal sanctions of underpayments. AAP

Employers have strongly opposed criminalising breaches of workplace laws, with the Australian Chamber of Commerce and Industry (ACCI) warning it would set a “disastrous precedent” where criminality could also apply to workers and unions.

The ACTU’s submission, filed last week, said “intentional, reckless or dishonest” underpayments should attract up to five years’ prison or $2 million fines for an individual and $10 million fines for a corporation.

The five-year prison term is lower than the 10-year maximum applicable to some theft offences which were highlighted by the government’s discussion paper, while the $10 million fine is in line with maximum penalties under consumer law.

But the ACTU would prefer the government enforce a lower tier of criminal penalties under a “strict liability” test with maximum fines of $1 million for corporations and $200,000 for individuals.

Prosecutors would not have to prove underpayments were intentional or negligent but employers would have to show they undertook “due diligence” on compliance to avoid punishment based on mistakes of fact.

“The availability of [the higher at-fault] offence would encourage earlier pleas to the lesser, strict liability offence, where the higher offence was appropriately charged on the facts,” the submission said.

“If the object of the current review is the deterrence of wrongdoing and encouragement of compliance, it cannot follow that an unreasonably high bar is set to attracting the stigma of criminality.”

‘Return to 19th century’

However, in an 86-page submission, the ACCI warned introducing criminal penalties in an industrial context “would reverse more than a century of modernisation in workplace laws, returning our system to approaches analogous to the 19th century when debtor prisons existed”.

“It may sound far-fetched but if underpaying someone becomes a criminal offence, then so too could the misuse of sick leave (an activity which surveys suggest almost one in five employees engage in every year) as a form of ‘time theft’,” the submission said.

It also begged the question of why criminal penalties should not be considered for the militant Construction, Forestry, Maritime, Mining and Energy Union.

“How could Australia’s most notorious recidivists (by some measure) remain able to pay fines when employers record convictions and risk jail?”

The employer group argued jail time would not improve compliance and instead have “significant negative consequences for employers, employees and the community more generally”.

“Placing employers at risk of imprisonment for underpayments would disincentivise businesses from actively self-reporting and rectifying errors; and act as a handbrake on the creation of new businesses and the employment of staff,” the ACCI said.

However, if criminal penalties were introduced, the ACCI said they should be limited to intentional, systematic or dishonest underpayments and not exceed a prison sentence of 12 months, as per the “most comparable” Commonwealth fraud offence.

The Coalition has given in-principle support for criminalising the most serious underpayments as recommended by the migrant worker taskforce, led by former competition watchdog head Allan Fels.

While the Victorian Labor government backs criminal sanctions for underpayments of up to 10 years’ jail, federal Labor is opposed to the reform due to the precedent it sets.