Parliamentary Committees

Select Committee on Wage Theft in South Australia

The Hon. I. PNEVMATIKOS (16:26): I move:

That the final report of the select committee be noted.

When I was elected to this parliament almost four years ago the term 'wage theft' had only just been coined. From its beginning as a colloquial phrase the term wage theft has grown, being referenced frequently by the media and within our judiciary through court decisions. The term wage theft refers to the dishonest, deliberate and systemic underpayment of wages.

Over the past three years, the committee has investigated the impact of wage theft on South Australia. During the committee's deliberations on the initial terms of reference it became clear that the COVID-19 economic measures and slavery and slavery-like practices in relation to wage theft should also be investigated. The evidence in the committee's final report presented today builds on and reinforces the findings of the interim report.

Our findings were shocking but, unfortunately, not surprising. The effect of COVID-19 economic measures put in place to counterbalance the impact of lockdowns and health measures did result in further abuse of some workers. With reduced job opportunities and the increased difficulty getting a job, workers were placed in a position where they were forced to keep their job even if they knew they were being underpaid and exploited. Over this period, there were fewer reports of wage theft or mistreatment for fear of repercussions in the workplace; for example, being removed from rosters, allocated more difficult work or even being dismissed.

Although the JobKeeper scheme did provide a greater outcome for workers and employers than no scheme at all, evidence revealed that the JobKeeper program was easily manipulated to advantage employers. The intricacies of the JobKeeper scheme, being a three-way structure between the Australian Taxation Office, the federal government and business, workers lacked information and were subject to employers' directives and misuse of the scheme.

During the height of the pandemic, media covered common potentially unlawful employment practices including:

employers forcing employees to take all leave entitlements while the employer was eligible for and receiving JobKeeper;

employers introducing leave specific to COVID-19, but requiring that all standard leave entitlements be used before it could be accessed;

employers forcing workers to take all leave balances using JobKeeper to pay them. When the leave balances were exhausted the workers were made redundant and the employers were exempt from paying out leave;

employers using the pandemic as an excuse to stand workers down without valid reason, but claiming it was simply a precaution;

workers being required to work additional hours to earn the JobKeeper amount, even if they were unable or unwilling to do so;

workers being paid only for the hours they worked despite the employers claiming the full JobKeeper amount; and

workers performing higher duties, but not being paid at a higher level.

But there are also sneakier, more egregious actions taken by employers, including:

workers being asked to sacrifice 10 per cent of their salary to 'help the business stay afloat';

employers asking workers to sign additional documents related to the ATO, which effectively entitled the employer to retain some of the JobKeeper payment, or make other unlawful changes. In one case, the employer was taking 60 per cent of the JobKeeper amount;

workers being unlawfully directed to forgo full-time or part-time employment to become casual, using COVID-19 to permanently change a worker's status of employment;

workers being directed to clean their employer's house to make up the difference between their normal wage and the $750 JobKeeper payment;

hospitality workers being tasked with renovating premises—not cleaning, painting or minor maintenance, but using power tools, undertaking carpentry work, commercial cleaning with commercial chemicals—with no safety training provided;

a childcare company terminating their cleaners and directing educators to carry out the additional cleaning.

Unfortunately, workers who were in particularly vulnerable positions of work such as migrant workers, or workers who were already experiencing wage theft often meant their conditions became worse by the economic measures for COVID-19. Employers who were doing the right thing prior to COVID generally continued good employment practices, but those who were not found new ways to exploit their workers through the JobKeeper system.

Hearing these examples it became obvious that wage theft heavily intersects with slavery and slavery-like practices when reviewing the evidence that the interim committee heard. The committee recognised that modern slavery is a multidimensional problem that includes wage theft but also threats and violence, racism, sexism and gender abuse, silencing and isolation. Some of the starkest evidence that was given to the committee includes:

women being required to work in bikinis, with their employer stating, 'You are mine for three months. If I say you are going to work like that, you are going to work like that';

workers repaying their employer for being sponsored into South Australia;

workers threatened for reporting an underpayment to the Fair Work Ombudsman;

workers' passports being taken by cash contractors, who demand the workers pay as much as $3,000 for the return; and

workers confined to a location, labouring for extremely long hours in pack houses for 12 to 14 hours a day with incorrect awards and incorrect classifications by the employer.

The assumption that workers are subject to these conditions because of their lack of knowledge, or they are somehow less conscious of these injustices because they are deemed more vulnerable, whether this is because they are migrant or in a regional area, is completely abhorrent. Our report dispels this line of thinking.

The reality is that, even when workers have knowledge of substandard conditions and the layers of unfairness, most have been unable to walk away. A combination of migration status, unfair working conditions, threats, deception and/or coercion often places people in a situation where they cannot walk away, creating conditions that are more akin to slavery than wage theft.

The stories written in this report, those who came into the report, they want justice, remedy and redress. They also never want their experience to happen to someone else. The recommendations provided in the report clearly outline a way forward to solving the issue of wage theft in South Australia, or at least going a long way towards that. The suite of recommendations includes:

expanding the Fair Work Ombudsman through funding and infrastructure to ensure it can operate in its intended capacity to resolve workplace disputes;

making amendments to the Fair Work Act, both federal and state, most importantly making it a criminal offence for an employer to dishonestly, deliberately and systematically underpay an employee;

amending the Modern Slavery Act to ensure mandatory reporting;

introducing measures to improve international students' and migrant workers' knowledge of Australian industrial practices and avenues and ability to seek redress;

greater transparency to ensuring superannuation is paid and is recoverable if it is not paid;

creating a state wage theft act to create an inspectorate that would act as a regulator with the functions and powers of inspectors as well as the ability to streamline court services for victims of wage theft;

expanding the Labour Hire Licensing Act to include all industry sectors; and

increasing funding and recourses to SafeWork SA.

Overall, there were 37 recommendations detailed in the report. The sheer number of recommendations shows just how widespread and entrenched the practice of wage theft is. It is not a one-solution problem. It will require serious legislative change and policy enforcement from government and community members to ensure wage theft is eliminated.

I am under no illusion that wage theft is not on the top of this government's agenda. In fact, the response to the report's findings and recommendations—the Hon. Heidi Girolamo submitted a dissenting report. I continue to be amazed at the Liberal government's opposition to wage theft. Since the inception of the parliamentary wage theft committee, this government has stood in its way. Each time, it has voted against the investigation.

In fact, reflecting back on the Treasurer's original contribution to this debate, he referred to the term wage theft as a 'weasel word'. Contrary to public opinion, agency and the media, the Treasurer continues to question the validity of the term. This rhetoric was evident in the Hon. Heidi Girolamo's dissenting report. She has continued the Treasurer's rhetoric to discredit the term wage theft. She argues that wage theft is used as a blanket term to describe the underpayment or non-payment of wages and entitlements that are due to employees.

When considering wage theft, we are not thinking about honest mistakes, an incorrect payment or underpayment. To put it bluntly, the term wage theft refers to the deliberate, dishonest and systemic underpayment of wages and entitlements.

Mistakes happen all the time. If honest mistakes are made by an employer, then these issues are addressed and resolved. There are good employers who have made genuine mistakes who work to remedy that in an open way. This report does not focus or target those employers. It targets employers who made their workers clean their house to receive JobKeeper payments. It targets those who made their workers go out in bikinis to pick fruit. It targets those who underpay their workers at $10 an hour and subject them to violence in the workplace. It targets those employers who are not playing by the rules.

The dissenting report goes on to detail the government's opinion that wage theft laws are more appropriately addressed by a national scheme. Agreed. We should have a federal scheme, but the reality is that the federal government failed to pass this some months ago. Following her federal colleagues, the Hon. Heidi Girolamo states in the report that it was Labor and the crossbench who voted down the proposed wage theft laws. Unlike her party, we were not prepared to compromise on any workers entitlements or rights being sold off for wage theft laws, so I believe a review of the Hansard would serve her well, to learn that it was actually the Liberal government who removed the wage theft provisions of that federal bill.

This dissenting report contradicts the overwhelming evidence that the committee heard. Perhaps this is because the Hon. Heidi Girolamo was privy to this evidence having only recently joined the committee, but I think the more likely reason is because this Liberal government simply cannot grapple with penalties for deliberate, dishonest and systemic underpayments of wages and entitlements. I am so glad the government has taken the time to write this dissenting report, so it is there for all to see.

I would like to thank the members of the committee past and present: the Hon. Terry Stephens, the Hon. David Ridgway, the Hon. Jing Lee, the Hon. Tammy Franks, the Hon. Emily Bourke, the Hon. Heidi Girolamo, the Hon. Rob Simms, the Hon. Russell Wortley, and the Hon. Connie Bonaros. I would also like to extend a big thank you to the committee secretary, Leslie Guy, and research officer, Dr Robinson, for their tireless work in supporting the committee and assisting with the report.

If we do not enact these recommendations, instances of wage theft will only become more prevalent. People will look back at this report and see that the Marshall Liberal government stood idle while contemplating the term 'wage theft' rather than taking action to better working people's lives.

The Hon. H.M. GIROLAMO (16:42): Today, I rise to speak on the report submitted by the Legislative Council's Select Committee on Wage Theft in South Australia. I would like to thank the witnesses who appeared before the committee and gave evidence. I would also like to thank the Chair, Irene Pnevmatikos, for her hard work and passion for workers' rights, and the other honourable members of the committee, as well as our secretary, Ms Leslie Guy and research officer, Dr Robinson.

Firstly, it is un-Australian, unfair and unlawful for an employer not to comply with the law by refusing to pay employees with their industrial entitlements for wages and conditions. It is also unlawful to threaten or blackmail an employee who speaks up about alleged underpayment. The Marshall Liberal government and I strongly condemn any employer who conducts any of this behaviour. However, as a member of the Legislative Council's Select Committee on Wage Theft, I would like it noted for the record that I do not agree with all aspects of the final report provided by the committee.

The term 'wage theft' includes all underpayment or non-payment of wages and entitlements in accordance with provisions, legislation, awards, contracts and enterprise agreements. However, this term is also often used to describe accidental errors and miscalculations that unintentionally result in underpayment for hardworking small businesses. Because of this, the South Australian government prefers to use the term, 'deliberate underpayment of wages and entitlement' as this does not capture those hardworking businesses who have made an honest mistake, especially given the complicated nature of many award rate structures.

The government is strongly opposed to creating a criminal offence for the underpayment of wages. Businesses that may have unintentionally underpaid employees due to genuine mistakes or misinterpretation of very complex awards and enterprise agreements will face harsh criminal offences, with similar punishments equal to dangerous criminals. This is why the South Australian government believes wage and entitlement law reform should be led by the commonwealth parliament.

An employee can also seek assistance from the Fair Work Ombudsman in relation to the underpayment of wage entitlements and superannuation. An employee can make their report to the Australian Taxation Office to investigate the matter further. I agree with the committee's recommendations encouraging increased public awareness regarding the role of these organisations by providing options and information to people who may be vulnerable to exploitation.

For the reasons mentioned above, I do not support the creation of a wage theft act in South Australia. I strongly believe it is appropriate that changes that will affect the federal industrial relations system be made within federal parliament. I do however support all efforts by the committee to encourage transparency as well as training and support for workers.

The Hon. R.P. WORTLEY (16:45): Before coming into this parliament I was a trade union official for 22 years. In that time, I came across varying degrees of and extents to which employees had their wages reduced. Much of it was through honest mistakes. It was always acknowledged, and it did not take long to prove that an employer had made a genuinely honest mistake. At that stage, it was because of the complexities of the award system.

I have been subjected to investigations—not of myself but of some employers—and I was surprised by the systemic nature of wage theft in this state. Some of the testimonies we had from people could almost bring you to tears because of how desperate they were and how they came to understand that they had been denied rightful and legitimate wages, long service leave, holidays and superannuation on the basis that it was part of the business model of the employer they worked for.

To say that we should not make wage theft a crime because innocent employers will be subjected to very significant charges is an astonishing claim. It is very difficult to prove or to get to the stage where an employer is found guilty of wage theft. There are a hundred reasons why this will not occur. Very often, employees do not understand their own rights. It is only when it is done on a huge scale that they actually realise that there is a crime being committed against them.

If an employee was to steal $5 from an employer, out of a till or wherever, that is a crime. That is a crime payable by fines or a gaoling offence, yet an employer can have a business model where they deny workers and deliberately take from workers their wages, hours of work, long service leave and superannuation on an ongoing basis, and very often this could amount to many thousands of dollars, but it is not a crime. It is just astounding. To a normal thinking person, it is wrong.

The recommendation in our report is long overdue. When Labor takes the government benches in March next year, I hope that one of the first things they do is to act on the recommendation of wage theft, creating it as a crime. Honest employers have nothing to fear. Honest employers who make a mistake—not a problem. I know a lot of employers who would be quite happy to do this because it puts these dishonest employers at an advantage to those people who are honestly paying their workers. That is just not right.

All honest employers would be quite happy to have wage theft as a crime. There will be employers who make mistakes. I know how complex a lot of this is. They do have employer associations who can tell them exactly what their rightful entitlements are. I was also astounded that a number of employer associations just refused to accept that wage theft was a problem in their industries, despite the fact that inquiries have shown otherwise.

There were 37 recommendations. Some of them have up to six or seven parts to them, but what really worried me was the exploitation of migrant workers. These are people who have come over here on visas, either student visas or temporary visas, and they are at the mercy, more often than not, of people of their own ethnic background.

They are at the absolute mercy of these people who, as the Hon. Irene Pnevmatikos said, very often take their passports. They have to pay back the sponsorship to these people. They are totally vulnerable, and if they make any sort of noise that they have been exploited or are being underpaid, there is a possibility that their sponsorship will be withdrawn and they can be sent back to their home country. This is one reason why there is so much wage theft within our multicultural society.

We all heard recently what happened in Fun Tea where a worker was quite viciously assaulted because they complained about being underpaid. There was also an inquiry into Chinatown, which found that wage theft is rampant in Chinatown. That is despite a witness coming to our committee and basically saying that this is only a very rare occurrence in Chinatown.

I would like to acknowledge the committee. I will also say that, even though the Hon. Ms Girolamo has put out a minority report, I accept the fact that there are many members on the other side who do not support wage theft. They do not support it at all but are probably not really aware of how systemic it is. It is systemic out there. It is a problem that spreads right throughout the workforce. This is done by some unscrupulous employers. The vast majority of employers are honest and are good employers, but there are certainly employers out there who can see that their bank accounts can be swollen by quite a significant amount of money by taking away from workers who work for them.

I would like to acknowledge the great work of the Hon. Ms Pnevmatikos. It was her commitment and her drive to actually bring this to a head that has led to this report. It is a great credit to her. Once wage theft is legislated as a crime, it will be largely due to the great work of the Hon. Ms Irene Pnevmatikos. I recommend this report. I thank all the committee. I thank the secretariat and look forward to next May, or whenever we come back, to start to put the recommendations into effect.

The Hon. F. PANGALLO (16:53): I am not on the list to speak but on behalf of SA-Best I want to commend the Hon. Irene Pnevmatikos for this inquiry. I think the timing of that inquiry was appropriate because, once that inquiry began, not only were they hearing these stories of wage theft that was going on here from witnesses, but at the same time we were starting to see stories emerge in other states, in other jurisdictions, of just how widespread and rampant this practice really is.

What is concerning, and what should be concerning, is that once we emerge from the COVID pandemic, whenever we get to the other side, there could well be a fear that, unless something is done to clamp down on this, this practice will continue where employers will begin to take advantage of employees who really have little option available to them in finding appropriate employment.

I will cite for a moment workers in the music industry. I was at a recent forum where there were thousands of those who are associated with that industry, from performers through to backstage people, stage managers, entrepreneurs and the like. They have all been hit hard by the pandemic. They have lost work, they have lost jobs and they will virtually take anything that they can get in order to make a living. As a consequence, we can expect to see those workers also exploited.

I also have other concerns. One of my favourite hobbyhorses is rideshare, and I suspect that even in that industry we are seeing workers who are being exploited, particularly those who are involved in the delivery of food. We have seen instances in New South Wales, in Sydney, where people in that industry have had horrendous conditions. Some have been killed and not been able to get compensation as a result of that type of employment.

I congratulate the Hon. Irene Pnevmatikos for bringing this to the attention of the council. She did so right at the beginning of this matter being brought to national attention, and I am sure that the recommendations of the committee will be welcomed, certainly in the next parliament.

The Hon. C. BONAROS (16:56): I rise very briefly to echo the sentiments of my colleagues, in particular the Hon. Irene Pnevmatikos, who, as my colleague the Hon. Mr Frank Pangallo has just outlined, brought this issue to the fore in this parliament in the wake, if you like, of the wage theft issue becoming a national issue and one that needs attention, and also of the Hon. Mr Wortley in relation to his contribution.

I have spoken on this issue previously. We have addressed those issues that do not equate to wage theft in terms of those small businesses that the opposition insists ought not to fall within the banner of this debate. We know that, put simply, those businesses would not be captured under any definition of wage theft unless of course they are doing the wrong thing and they are blatantly ripping off workers and their entitlements.

I did serve on the committee that has been referred to. SA-Best, and I on behalf of SA-Best, have fully endorsed the recommendations and the findings of that committee, and continue to do so. It is a pity, in my view, that the Liberal Party could not see fit to see beyond its own political agenda on this issue and acknowledge the very real issues that were brought to bear as part of that inquiry process and have continued to be borne out on the national landscape as well.

With those words, I just want, for the record, to not only indicate again our full support for this report but also to thank and acknowledge the hard work of the Hon. Irene Pnevmatikos in bringing this issue to the attention of this parliament and ensuring that the recommendations and the findings of that report reflect the true nature of wage theft that is occurring in our community and the need to address it.

Debate adjourned on motion of Hon. J.S. Lee.