Employers who commit deliberate wage theft could face jail time under a new Federal Government proposal.
The tougher penalties are part of a bill introduced to Parliament today by Employment Minister Tony Burke.
The Coalition and several business groups oppose the bill, but Burke said he believed it would still pass.
What is wage theft?
‘Wage theft’ is a term used to describe employers who fail to give employees their legal entitlements (e.g. pay, super, or annual leave).
There is currently no formal legal definition of wage theft. Views differ over whether the term should apply to deliberate underpayment or to all underpayment, including careless or accidental overpayment.
How much wage theft is there in Australia?
It is difficult to know how much underpayment there is in Australia. Most estimates suggest there are billions of dollars in unpaid entitlements every year.
Underpayment is believed to be particularly prominent in hospitality, retail, cleaning, security and higher education.
Push for jail time
Wage theft is not currently a crime, although civil penalties (e.g. fines) are available for serious or repeat cases.
In 2022, a Senate inquiry recommended making deliberate or reckless examples of underpayment a crime with possible jail time.
This was supported by Labor and Greens Senators on the committee, but not by Senators from the then-Morrison Government.
Earlier this year, the Albanese Government released a paper outlining potential options for criminalisation. It has now introduced the bill to do this.
The Government’s bill would see employers who are convicted of deliberate wage theft facing harsher financial penalties. Possible sentences could reach up to 10 years in jail.
Minister Burke said the penalties would apply to a small proportion of total underpayments, as “most underpayments are a mistake”, but that deliberate cases should be treated in the same way as a worker “taking money from the till”.
Will it pass?
The wage theft changes are part of a broader bill that will also give some casual workers the right to seek permanent employment and introduce minimum protections for gig economy workers.
The Coalition opposes the bill, along with several business groups. The Business Council of Australia has called the Government’s plan “radical” and said it would create “confusion” and add to a “sea of red tape” for businesses.
Opposition Leader Peter Dutton said prior to the release of the bill that it would be “an economy destroying piece of legislation and just another nail in the coffin of small business”.
With the Opposition against it, the bill would need the support of the Greens and at least two other Senators to pass.