WAGE UNDERPAYMENTS BY LARGE COMPANIES SWAMP FAIR WORK

EWIN HANNAN

• NOVEMBER 2, 2019

The Australian 

Fair Work Ombudsman Sandra Parker will review the agency’s operations in the wake of a raft of massive wage underpayments by large companies, declaring the ­extent and complexity of self-disclosures by big employers is “far greater than we could ever have envisaged”. 

Signalling the agency would seek further funding, Ms Parker said the regulator’s resources had in the past been primarily focused on compliance by small businesses, but there had already been 22 separate large underpayments by big companies reported this year.

“It’s tipping us into the corporate regulator space and we have never been in that space before,’’ she said after Woolworths ­revealed it had underpaid almost 6000 workers by up to $300m over nine years.

“All these companies are coming forward, with their large ­underpayments, complex company structures. We are getting massive self-disclosures that is putting us into the realm of being a corporate regulator because the community is expecting us to be satisfied that the company is properly assessing the underpayments.”

She said the conduct of the large employers “requires a different set of skills in this agency and high-level legal expertise”.

“Companies are coming to us with teams of lawyers. Negotiation skills need to be high and we need forensic accounting ­expertise,’’ she said.

Asked whether she would seek extra funding from ­Attorney-General Christian Porter, Ms Parker said: “We have had good support from the minister but the extent and complexity of self-disclosures are far greater than we could ever have envisaged. It is true this has significantly increased our workload, and the previous work, of course, doesn’t go away.

“We are still regulating the 12 million workers and two million employers. We have a significant education and promotional role. We still help everyone who contacts us so we do need to review our approach and our resourcing.”

Ms Parker said the agency would be reviewing “where our pressures are and what this means for us”. “It’s ramping up, there’s a lot more of it,’’ she said. “Initially we thought there would be a few of these, but they just keep coming. So, yes, I think we do need to ­review our priorities and how we do our work, and that may involve looking at our resourcing.”

The government recently ­increased the FWO’s funding by more than $60m, improved the regulator’s evidence-gathering powers and increased penalties available for breaches of the Fair Work Act up to tenfold.

Mr Porter said on Thursday the Morrison government would further increase maximum civil penalties for employers found to have engaged in the underpayment of workers.

The government is examining legislating maximum jail terms of five to 10 years, for deliberate, systemic cases of wage theft, with ­potential criminal penalties confined to the “most serious types of offending”.

A discussion paper released last month had said civil penalties, increased in 2017, would be ­reviewed as there was a strong case to improve the compliance regime. “Not only has there got to be a criminal penalty for the most serious types of wage theft, but the civil penalties just have to be higher, because these companies aren’t getting the message and the deterrence needs to be greater,” Mr Porter said.