Following news that Super Retail Group underpaid its staff almost $8 million last year, Ragtrader spotlights a speech the former Fair Work Ombudsman Natalie James delivered to a reform forum in May.
"For the Fair Work Ombudsman, the agency responsible for compliance with workplace laws, cases involving underpayment of workers is our everyday – and has been ever since our birth, nearly ten years ago.
In the last five financial years, the FWO recovered $125 million for workers who were not being paid correctly. Our annual recoveries in this period have ranged between $22 and $30 million, with slight increases in the last two years.
Whether underpayment has arisen out of deliberate and calculated conduct on the part of an employer, or failure to check and properly apply the rules, there is a growing intolerance in the community for such cases. Regardless if you’re a big name brand or a local café.
As the headlines have gotten bigger, the stories of exploitation more extreme and shocking, we’ve seen the term ‘wage theft’ enter the vernacular and our twitter feeds. The stories are important, and when viewed alongside data, we can get a picture of some of the dynamics at play in the labour market when underpayments occur.
The Australian economy is supported by more than 12 million employees, working in over 2.2 million businesses.
While the numbers of workers and businesses has been steadily rising, the number of disputes we receive has remained reasonably consistent at about 25,000 requests for assistance each year.
Most of these disputes are about wages – usually claims of underpayment of the hourly rate, or claims that the individual has not been paid at all for time worked.
Behind each of these disputes is a story, and it is increasingly likely, a vulnerable worker.
These days, our dispute forms are much more likely to come from a worker on a visa. In 2012-13, 8 per cent of the disputes we resolved were from visa holders. At 31 March this year, that figure was an astounding 20 per cent.
Astounding because this cohort is only 7 per cent of the labour market.
There are a number of reasons for this group being over represented in our work.
One factor at play is the increase in the number of temporary visa holders with work rights, thanks largely to big increases in international students coming to Australia.
We hope another reason is that we have deliberately sought to encourage this cohort to come to us for help by breaking down some of the obvious barriers that cause them to hesitate.
But let’s be blunt – a key reason visa holders are now one fifth of those seeking our help is the most obvious one: being new to the Australian labour market, desperate to hold onto a job and primarily concerned about their visa, this cohort is particularly vulnerable to exploitative practices and there is no shortage of operators all too willing to take advantage of this.
And there is reputable research by academics to support this proposition.
The other significantly overrepresented group featured in our disputes are workers under the age of 25. Although they are around 15 per cent of the workforce, they have consistently provided us with one quarter of our disputes.
And the trend may be on the up. At the end of March this year, it had risen to 28 per cent.
This is why young workers have similarly been the subject of focused campaigns to dispel common myths they encounter in the workplace.
Another source of information about the extent and nature of non-compliance is our campaign data.
Each year for the last five years, the FWO has carried out between four-and-a-half and five-and-a-half thousand audits of workers’ records across the country as part of proactive compliance campaigns.
These campaigns generally focus on a sector or region with a higher risk profile.
Over the last 5 years, the proportion of audits where the employer was fully compliant has ranged from as high as 66 per cent in 2014-15 to as low as 53 per cent last financial year.
A mark of full compliance is only given where everything is perfect – workers are paid correctly, they get payslips the day after the pay period ends, and those pay slips contain all their statutory requirements like hours worked and superannuation details.
If we focus on errors that result in an underpayment, the compliance rate has hovered around 70 per cent and above since we have been disaggregating the data that way.
In every campaign, we find a business that has overlooked the most recent Annual Wage Review, or has misclassified a worker under an award, perhaps as a Level 1 when they should have been a Level 2.
Or a business paying flat rates of pay, with variable degrees of checking that the flat rate will be enough to cover each employee’s hourly rates of pay taking into account the hours they have worked and the various penalties, overtime and allowances that may be payable under the award.
We find consistently that large businesses are more compliant than small businesses, and members of employer associations are more compliant than businesses that don’t join an industry body. It is not a surprise that businesses more likely to have sourced sound advice are more compliant.
Most businesses that are the subject of one of our audits are quick to fix any error we find. In some cases it may have been the first time they have engaged with the FWO or had reliable advice about what they should be doing."