Wage theft criminalisation proposal facing backlash

Innes Willox, chief executive of national employer association Ai Group, has doubled down on his criticism of the government’s possible implementation of criminal penalties for the underpayment of wages.

Mr Willox said the implementation of the proposal to criminalise wage underpayments would hinder not help workers impacted by the pay non-compliance.

“Criminal penalties do not address why most underpayments occur,” said Mr Willox. “They instead prioritise the punishment of employers while leaving underpaid workers out of pocket.”

“Criminal proceedings would disadvantage workers, including the most vulnerable, by significantly delaying civil recovery of underpayments while criminal proceedings are taking place.”

“Where a criminal case is underway, any civil case to recoup unpaid amounts would no doubt be put on hold by the court until the criminal case is concluded. This means underpaid workers could be waiting years for redress.”

Mr Willox’s criticism was directed at the government’s ‘Criminalising wage underpayments and reforming civil penalties in the Fair Work Act 2009’ consultation paper.

In it, the government said a greater deterrence through substantial penalties was required after in 2021–22 the Fair Work Ombudsman recovered over half a billion dollars’ worth of underpayments for almost 385,000 workers.

The consultation paper “proposes options for a criminal offence for wage underpayment and proposes methods for increasing the maximum civil penalties for wage exploitation-related provisions of the Fair Work Act.”

In its submission, Ai Group said the primary concern was a criminal focus would take away the ability for impacted workers to be compensated promptly.

“Criminal penalties do not address why most underpayments occur. They instead prioritise the punishment of employers while leaving underpaid workers out of pocket,” the submission said.

Mr Willox also reiterated his concern that implementing possible criminal penalties would stop businesses from self-reporting wage underpayments which was an important tool used by the FWO to act for affected employees.

“Exposing businesses, directors and managers of businesses to criminal penalties would operate as a major barrier to employers self-disclosing and rectifying underpayments,” he said.

“It will foreseeably discourage constructive engagement with the Fair Work Ombudsman.”

Submissions for the ‘Criminalising wage underpayments and reforming civil penalties in the Fair Work Act 2009’ consultation paper closed on Friday 12 May, and the government stated measures would be introduced in legislation in the second half of the year.

This article was originally featured in Accountants Daily.