“Systemic wage theft”: Workers to chase employers for stolen pay under new Labor plan

Workers will be able to chase employers for up to $100,000 in unpaid wages through a new arm of the Fair Work Commission (FWC) if Labor wins the upcoming election.

Opposition Leader Bill Shorten today announced a crackdown on “systemic wage theft” if voters put him in the lodge on Saturday, unveiling a plan to make it easier to recover pay through a new low-cost claims jurisdiction which would sit alongside the FWC.

The jurisdiction will aim to resolve wage claims within a day and has been proposed as a “one-stop shop” for pay disputes, able to make and enforce wage repayment orders as well as mediate disagreements.

“We have seen too many examples of systemic wage theft, but lengthy and costly court proceedings often prevent and deter workers from recovering wage underpayments,” Shorten said in a statement circulated on Wednesday morning.

“It shouldn’t be too hard, it shouldn’t be too costly, to get what you are owed for a day’s pay.”

Commission members would adjudicate claims under the proposal, while employer groups and unions could act on the behalf of their members on request.

The policy will cost taxpayers $51.1 million over the forward estimates, including $10 million a year for the actual jurisdiction and $3.7 million in grants for legal centres who help workers make claims.

Labor says it will “consult with employers, unions and other stakeholders” on the final model for the jurisdiction, but as a general policy priority, wants to ensure the new scheme is affordable and accessible for workers.

The policy is the latest measure to be added to Labor’s extensive industrial relations reform agenda ahead of the election this weekend, as the opposition looks to draw a clear distinction with the Coalition.

Previously, Shorten has declared the upcoming poll as a “referendum on wages” and earlier this week wrote to FWC president Iain Ross requesting a “real increase to award rates” for low-paid workers.

Under current laws, the Fair Work Commission is only able to resolve workplace disputes within the remit of workplace agreements, while employees who believe they’ve had their wages stolen can either contact the Fair Work Ombudsman (FWO) or pursue the matter through the courts themselves.

“Challenging task for most employees”

A research project into wage theft undertaken by the McKell Institute in Victoria identified a variety of issues with the current small claims landscape for employees.

The progressive think tank says vulnerable workers are particularly likely to find it difficult pursuing a matter through small claims courts, with research suggesting only two in five workers know the option exists.

“Mounting a legal challenge to recover stolen wages requires an employee to provide evidence, work through procedural hurdles, and be willing to carry the burden of waiting times and legal costs,” the institute said in its March report.

“Don’t need to reinvent the wheel”

Numerous state-based small claims courts which can hear wage disputes already exist for recovering wages up to $20,000.

Lawyers are not required, and matters are generally resolved in a single hearing, prompting workplace lawyers SmartCompany spoke with on Wednesday morning to question the wisdom of an entirely new jurisdiction.

“It would be a simple matter to increase [the small claims] threshold,” lawyer Peter Vitale says.

“Adding another court or tribunal will only add to confusion for working people looking to recover entitlements, as they try to figure out where they should go.

“It involves unnecessary duplication and the money would be better spent on appointing more judges and registrars in those jurisdictions to mediate and adjudicate claims.”

Workplace Law managing director Athena Koelmeyer agrees, saying accessible means for legal redress already exist for workers.

“You don’t need to reinvent the wheel, you could just make fairly minor changes to the existing infrastructure,” she says.

“Setting up yet another specialist jurisdiction sounds like a very significant investment in cost and infrastructure to pursue a specific matter,” Koelmeyer says.

The size of Australia’s wage theft problem is difficult to discern. The FWO recovered almost $30 million of unpaid wages in 2017-18, litigating in 35 cases, but Labor says things are “much worse”.

Tackling wage theft is a priority for small-business owners as well, as dodgy employers represent a competitive threat with materially lower costs.

However, Labor did not detail how its proposal would avoid spurious claims on Wednesday, an issue that has arisen in existing laws around unfair dismissal applications.

The devil will be in the detail, according to Koelmeyer, who says businesses should also be wary of any attempt to use the new jurisdiction to reverse the onus of proof on employers.

If the model were to flip, “an employee makes an assertion that there’s an underpayment, and then the employer [has] … the burden of proof to demonstrate otherwise,” Koelmeyer explains.

“That would add considerable workload for employers.”

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