Select Committee on Wage Theft in South Australia

Adjourned debate on motion of Hon. I. Pnevmatikos:

That the interim report of the committee be noted.

(Continued from 22 July 2020).

The Hon. C. BONAROS (16:57): I rise to speak in support of the interim report on wage theft. Some of Australia's major retailers would have us believe wage theft does not exist in this country. Federal Attorney-General Christian Porter emphatically believes otherwise and has threatened to introduce new industrial relations reforms to name and shame those businesses found guilty of wage theft, an issue he describes as 'an endemic problem in Australia'.

His warning followed supermarket monolith Coles adding itself to the long list of companies, including Woolworths, Bunnings, the Super Retail Group and iconic restaurant chains, found to be ripping off their employees. Coles has gone on the public record, saying it has set aside $20 million this year to cover payment discrepancies that it said occurred over a six-year period, and it is not alone.

Late last year, the country's largest retail conglomerate, Wesfarmers, revealed it had underpaid workers $15 million over the past nine years. Closer to home, South Australia's largest private employer, convenience store chain OTR has recently been accused of wage theft that could amount to some $70 million in underpayments to thousands of employees. A class action on behalf of 1,050 workers in that instance has been instigated and lodged with the Federal Court.

The company is accused of failing to pay overtime, underpaying staff and misusing its traineeship program as a method to reduce workers' pay. This is not dissimilar to many of the claims involving other similar employers. It estimates that more than 8,000 current or former employees of the chain are eligible to join the class action and claims that the operators could be liable to pay back $50 million to $70 million in unpaid wages and entitlements.

These allegations, which date back to 2014 and span across all of the OTR stores in South Australia, involve eight different wage minimisation tactics that allegedly enabled the organisation to underpay its staff. But, again, they are not alone. In August, another of South Australia's largest independent retail groups, the Romeo's Retail Group, was accused of wage theft that could amount to $20 million in total underpayments to at least 500 employees.

The firm representing the workers has accused the company of failing to pay overtime, penalty rates, allowances and leave loading on annual leave, and of engaging in tactics to minimise wages. The group has about 50 stores across South Australia and New South Wales. The law firm estimates that more current and former employees are eligible to join the class action and alleges that the owner-operators could be liable to pay back nearly $20 million in unpaid wages and entitlements.

I should make a disclaimer at this point, because my husband previously worked for Romeo's, so I should just place that on the record, given that I have just indicated those claims. I will place another disclaimer on the record: I worked for Drakes, and the next one I am about to address is Drakes.

The Hon. T.J. Stephens: Were you any good?

The Hon. C. BONAROS: I was good; I was very good. The class action alleges that Drakes staff were not paid allowances and entitlements owed from performing overtime and penalty work. It further claims that employees had been paid for 38 hours per working week yet were rostered to work 45 hours or more per week, and worked in excess of rostered hours. The statement of claim lodged with the Federal Court late last month claims, amongst other things, that staff had uniform costs deducted from their wages, and that in 2017 staff were directed not to record their hours on an electronic time record system. It seems, from what I have said, that no-one is immune.

It also seems that there is a lot to be said about the advice that many of these businesses—otherwise good, local, loyal SA businesses that we have all come to love and support—have received. It is really important, I think, that we acknowledge this point, as some of the interpretations that have resulted in these claims simply do not add up with what these businesses thought they could do.

In my view, it would be naive or even irresponsible for us to suggest these actions all emanated from some wilful or deliberate attempt to underpay staff. I simply do not think that that is necessarily the case. As I said, we have a number of good, local SA businesses here that we have all supported for a very long time, that now find themselves in the same category as the big operators in town, so something does need to be said about the advice that has been relied on, and about previous interpretations that they have relied on, versus current legal precedence and interpretations.

These businesses would have inevitably relied on the advice of lawyers, accountants and other experts, and will no doubt have attempted to avail themselves of any measures available to them that would have resulted in saving dollars. I can understand that, but these dollars have, in a growing number of cases, come from the pockets, from the pay cheques and at the expense of hardworking and loyal employees. These are not my findings, these are the findings of those actions that the committee has been considering.

They are the challenges that confront us. Most, if not all, of us in this place and throughout the community have always, as I said, supported these very proud SA-owned businesses, and that is really what I think makes it even more difficult to reconcile—the extent of the claims that we are hearing about with their otherwise strong reputations and track records. But what irks me is when those who do know better seek to downplay their roles and responsibilities in such cases.

A case in point is the evidence given before the committee of the Shop, Distributive and Allied Employees Association (SDA). It annoys me because the SDA knows that SA-Best has a long track record of supporting the very good work that they do to protect workers' rights and entitlements—and I would like to think that we have a very good working relationship—but there comes a point when you have to accept that you stuffed up and take responsibility for your actions.

Trying to undo or shy away from evidence given to a select committee by a member of your own organisation, that you then attempt to reverse without any regard for the facts or the role your organisation played in it, simply does not cut the mustard. In fact, it undermines the very important work organisations otherwise do in protecting the rights of their members. It undermines the very important work that the SDA does for its members in terms of protecting their rights and entitlements.

The committee has heard overwhelming evidence about the extent of underpayment of wages and entitlements and of wage theft. The work of groups like the McKell Institute, which has thoroughly investigated the extent of wage theft and produced a significant body of data to the committee; the various legal centres that represent vulnerable workers; academics; researchers; multicultural organisations; youth groups; the growing number of judgements and legal precedents; and, indeed, the body of data by the Fair Work Commission all clearly point to a significant problem across our workforce that warrants further scrutiny and attention by the federal and state governments.

You do not need to take the committee's word for it. As I said at the outset, federal Attorney-General Christian Porter has said that he will not hesitate to name and shame those businesses who are found guilty of behaviour that he describes as 'an endemic problem'.

In closing, I am extremely grateful to my colleague the Hon. Irene Pnevmatikos for her tireless commitment to push ahead with this enquiry, and her very long track record of fighting for the rights of workers despite pushback and resistance from the business sector at large, which has now been forced to confront some uncomfortable and damaging truths.

I also want to thank the committee's research officer, Margaret Robinson, and the secretary, Leslie Guy, for working with the committee members to this point in terms of preparing this interim report. I also thank each of the former and current members of the committee: the Hon. Emily Bourke, the Hon. Tammy Franks, the Hon. Jing Lee, the Hon. Terry Stephens and the Hon. Russell Wortley. I will have more to say about the issue of wage theft once we have a final report before the committee.

The Hon. R.I. LUCAS (Treasurer) (17:06): This motion is merely noting the report, so we are happy to support it; however, I do want to take the opportunity to repeat the government's position in relation to this particular issue. The government do not support any employer who deliberately sets about underpaying the wages of their employees. I am sure that is common ground amongst all members. The distinction that I have previously sought to put is between a deliberate and conscious decision, which I think the federal minister Christian Porter has referred to, in terms of deliberate underpayment.

This is an important distinction because the term 'wage theft', which has been embraced by the supporters of this particular issue, includes not just those who deliberately underpay, but embraces those who, through inadvertent or unintended action, have not complied with the award conditions their employees are entitled to. This is why we have the Fair Work Ombudsman and the like to provide assistance for employees.

I do note that the nature of the speech given by the Hon. Ms Bonaros today in relation to the issue of wage theft is markedly different to one that she gave earlier. I think she was seeking to acknowledge that there may be well-intentioned employers who are now being accused of wage theft in the public arena. In her contribution today, she stated that she did not believe that some of those employers would have been intending wage theft, as has been characterised.

That is, indeed, the distinction we made earlier. It is our view that there are genuine employers who I do not believe ever intended to deliberately underpay their employees. To characterise them as thieving wages from their employees, as supporters of this particular issue have done, is unfair on them.

I do want to speak up on behalf of local retailers like Romeo's and Drakes in South Australia because I do not believe, knowing the owners and proprietors of those particular businesses, that they would be people I would feel comfortable of accusing of wage theft and including them in the pejorative phrase and the characterisation, which is quite damaging to those particular businesses, of being engaged and involved in wage theft.

They may well have underpaid and not complied with award conditions; that may well be an issue. That will ultimately be something we determine either by tribunals or courts. But the point we have always made is that the use of this phrase 'wage theft' can destroy the reputation of reputable employers who have done a lot of good for many South Australians. Whilst I have had different views to the Romeo's and the Drakes on issues like trading hours and the like, I have publicly congratulated people like Roger Drake, and I do so in relation to the Romeo's, as being successful local South Australian businesspeople in terms of what they have done.

Where we are now because of this phrase 'wage theft' is that the Romeo's group, for example, is facing class actions over claims they have underpaid staff by nearly $20 million. Class actions from allegations dating back to 2014; $20 million in unpaid wages and entitlements. An employee, who worked at three different Romeo's stores between 2016 and 2018, is one of the claimants who makes a series of allegations about wage theft and deliberate underpayment of wages by Romeo's. He refers to senior management in a number of stores.

Another employee, who is part of the class action, worked at Romeo's stores from 2009 to 2014. Again, this is drawn within this broad umbrella of accusing Romeo's as a group of wage thieves and, again, with the broad reference by these individual employees and the groups who represent them of characterising not just the owners of Romeo's but the managers of the individual stores of Romeo's as being complicit in terms of wage theft.

Similarly, with Drakes supermarkets, there has been recent publicity in relation to both ownership and management of the Drakes stores. I think that is unfair. I really think that is unfair. It should be called and distinguished for what it is. That is, distinguishing that it is an employer who deliberately underpays wages who should get a fair whack, which is what Christian Porter the federal minister has indicated.

Someone who has inadvertently taken wrong advice or wrongly interpreted award or enterprise bargaining conditions and not paid their employees, nevertheless still should be brought to account, if there is a tribunal or a court which finds that they have wrongly paid or underpaid their particular workers or employees during that particular period. If that is the case, it should be corrected. The employees are entitled to whatever it is they are entitled to and that should be resolved.

To characterise this as wage theft on reputable, in my view, and genuine employers in South Australia—and I will defend the reputation of the Roger Drakes of this world and the Romeo brothers of this world until someone can give me evidence otherwise that says they deliberately set about thieving wages from their employees. I will not believe that until someone can produce the evidence that says they were thieving wages from their employees. It is grossly unfair to damage the reputations of groups like Drakes and Romeo's in South Australia in the way that it has been characterised.

That is my entreaty to those who support this particular cause. Describe it as it is. Distinguish between deliberate underpayment of wages and belt the hell out of those particular employers. But distinguish them from those who have made genuine errors, who have not set about deliberate underpayment of wages, but who nevertheless need to be held to account. If they have to repay underpayment of award conditions or enterprise bargaining conditions, they should be required to do so. I have no concerns about that at all.

It was sort of easy when the targets in the early stages of this debate were big multinational companies in the other states. It then spread to the ABC, for example, much supported by various groups in the community, who were accused of underpayment or wage theft. Again, I do not believe the ABC did it as a deliberate endeavour to thieve wages from their employees, but they will need to be held to account—or perhaps they have already been held to account; I do not know—in relation to those particular issues.

We have seen examples in this state where the potential underpayment of public servants within departments, which go back many years prior to the change of government, is being challenged through various tribunals. Again, I do not characterise that as wage theft from employees. I do not believe that Labor ministers of the former government deliberately set about thieving wages from their employees. It was a difference of opinion, I am sure, based on Crown legal advice in terms of what the employment conditions mean.

I have long argued that these are complex matters. Some of the people in the past debates, when you have a look at them, when I have raised the issue that these are complex matters in terms of interpretation, have characterised it as, it is black and white, you either do it or you do not, it is clear what you have to pay, but anyone who has any experience and any knowledge of employment law will know that there are complicated issues in relation to employment law: enterprise agreements, the payment of allowances and the payment of benefits. All those sorts of things can be complicated.

They are clearly complicated for small businesses. As we are seeing now, they are clearly complicated for reputable state businesses like Romeo's and Drakes. They are clearly complicated for big government organisations like the ABC, so I think we have to acknowledge that this particular debate is not as simple as some have sought to characterise it, that you should just be paying clearly what you are required to pay. Of course you should, but sometimes there is either confusion or differing opinions as to what the enterprise agreement or the award conditions might mean.

With that, I leave on the public record my defence, until someone else can prove to me otherwise, that I do not believe the Drakes and the Romeo's of this world should be accused of wage theft, should be included in this general debate under the topic of wage theft. I strongly oppose that ongoing characterisation and the damage to their brand and their business from being characterised as such by those who continue to pursue this particular issue. I remain strongly of the view that any employer who deliberately underpays their workers should be held to account, and I support the broad positions that the federal minister, Mr Porter, has been putting in relation to holding those particular employers to account.

The Hon. I. PNEVMATIKOS (17:18): I do not know where the Treasurer gets his information from, but there were no direct accusations made against any particular individuals in the deliberations of the committee looking into wage theft. I appreciate that the Treasurer has always had concerns, from the outset when this committee was established, in naming the committee a committee on wage theft, but I think the Treasurer should appreciate that he is working against the tide in that regard. It is a widespread problem. It does not afflict all employees or all employers; nonetheless, it is an issue, and certainly the deliberations of the committee have identified that.

Secondly, can I simply state that this was a parliamentary inquiry; it was not a court trial. It was not a presentation of evidence and a determination of people's guilt or otherwise. There are courts in the land that can address those issues and that have on various occasions.

In any event, I would like to thank all members of the wage theft committee, past and present, for their contribution: the Hon. Connie Bonaros, the Hon. Emily Bourke, the Hon. Tammy Franks, the Hon. Jing Lee, the Hon. Terry Stephens and the Hon. Russell Wortley, as well as the committee secretary, Leslie Guy, and the research officer, Margaret Robinson. Further, I would like to thank those who spoke on the report: the Hon. Connie Bonaros and the Hon. Rob Lucas.

The committee's interim report revealed that wage theft is widespread, affecting all industries, and is a deep-rooted issue that requires immediate action and remedy. The report heard from organisations questioning the efficacy of existing structures to properly address and redress wage theft. In response, the interim report identifies three key areas for South Australian legislation to address: the need for greater oversight and regulation in a more systemic and integrated way; increased penalty for offenders, including criminalisation in certain cases; and, lastly, streamlining court and tribunal processes.

Before the winter break we established that the committee would also look at the intersection of slavery and slavery-like practices, as well as the effects coronavirus has on wage theft. The committee still has more to uncover in these areas and will release a final report detailing further recommendations. Wage theft is not only hurting workers, it is hurting employers and businesses who are playing by the rules and the state's economy. Now, during this pandemic, is the time to be addressing these systemic issues to build back stronger and fairer structures. I commend the report.

Motion carried.