Reducing Wage Theft: An Interview with Unions NSW’s Thomas Costa

The practice of underpaying employees is on the rise in this state, according to a recently released Unions NSW report. Four out of five businesses advertising on popular non-English language websites were found to be offering illegal pay rates.

The Lighting Up the Black Market report is the result of a two-year investigation conducted by the state’s peak union body. The organisation undertook two separate audits of a total of 200 online job advertisements written in Chinese, Korean and Spanish in March last year and April this year.

Over 78 percent of the businesses on these sites were advertising underpaid positions. On average, these jobs were offering $14.03 an hour, which is $5.28 below minimum award rates. The lowest advertised positions were for a nanny at $4.20 an hour, and an office clerk at $9 an hour.

Sectors of the hospitality, cleaning and retail industries were found to be where this practice is most rampant.

Those employees affected are often unaware of their workplace rights, due to language barriers. And they include both citizens and permanent residents, as well as migrant workers on temporary visas.

The report also found that these practices are on the increase. In 2016, 74 percent of the jobs were advertised at below award rates, while in April this year, 83 percent were.

Ripping off employees

There’s a rising awareness that wage exploitation is taking place in the Australian work environment. Recently, there was the well-publicised case that exposed the 7-Eleven company was carrying out the mass underpayment of its workforce, and blackmailing employees to keep quiet about it.

Fruit picking is also another sector of the economy where underpaying workers is common practice. Farms have been found to be employing migrant workers supplied by labour hire contractors, who threaten these employees into accepting underpayment.

In the cases of restaurants and cleaning companies that have been exposed underpaying their workers, some employers have stated that paying their employees illegal rates stems from the widespread practice of it by other businesses in their sectors.

However, it’s been found that after some businesses have been caught underpaying workers, they simply go back to doing it again, once back payments to employees have been covered. And it’s due to this lack of safeguards that Unions NSW is calling for changes.

Enforcing minimum wages

The Fair Work Act 2009 is the law governing industrial relations in Australia. Under this act, “the current approach to stamping out underpayment of culturally and linguistically diverse workers… is not working,” the report states.

Unions NSW wants the legislation amended to allow for unions to enter workplaces and investigate cases of underpayment. It also outlines that the practice of “spot audits” being carried out by the Fair Work Ombudsman is not working, as employers systematically reoffend after being audited.

Sydney Criminal Lawyers® spoke with Thomas Costa, the assistant secretary of Unions NSW, about the extent of wage exploitation in this state, why the current system isn’t working, and the need for the practice of underpayment to be criminalised.

Firstly, Thomas, how prevalent is the practice of underpayment in NSW? Is it only affecting non-English speakers? And is it on the rise?

Look, it’s definitely on the rise.

Our report spans two years of research, which started looking into the advertising of jobs below award wages last year. And we followed it up this year.

We didn’t just find that it was high and consistently high. It’s increasing. Underpayment had increased over the one year period that we looked at it.

Our report doesn’t look into specifics of underpayment in the non-foreign language space.

But anecdotally, we’ve been hearing from our members that it is becoming increasingly common, in sectors like hospitality and retail, where there’s a cash economy. We’re hearing about very similar payments occurring for English-speaking workers, just as there are in the job advertising.

Australia has a long history of implementing workers safeguards. What is it about the system now that’s leading to this situation?

We think there’s a couple of factors, but the most important factor is that there are no disincentives for underpaying workers. Currently, the legal system that exists has civil penalties, and there are civil mechanisms for pursuing an underpayment of wages. But, there’s no criminal penalties.

This means, for example, if I steal from my employers, I’m pursued by the police. I’m prosecuted in the courts. And I receive a criminal penalty and record.

If my employer steals from me, I can then, at my own cost, sue them in the civil courts.

But, if that employer decides to pay me back everything he or she owes me, they receive no criminal record. They will receive no criminal penalty. They’re most likely to receive no penalty at all, except for compensating me the amount that I was owed.

So there’s no disincentive not to underpay a worker, except for your own moral and ethical standards, which I’m sure most employers adhere to.

But there is this large minority of employers who are acting on that and underpaying their workers. And really what’s there to stop them, except having to pay their workers back if they get caught.

And if they don’t, it’s a windfall for them.

Are people finding the underpaid positions on these sites prior to coming to Australia, or are they accessing after arrival?

No. These are workers in Australia. It’s not just migrant workers. It’s workers who are looking for jobs on foreign language websites.

For example, we looked at one very popular website called Sydney Today. One hundred percent of the jobs advertised on that website were advertised for rates below minimum award wages.

The majority of people who are engaging in that website are not overseas workers or migrant workers, they’re Chinese-speaking workers that are looking to get work on these websites in their own language.

But aren’t there some people on temporary visas that are affected as well?

Yeah. There’s an additional problem that if you are in Australia on a visa – so if you’re not a citizen and you are on a working holiday visa, a student visa, or a partner visa – it’s more likely that you are going to use these websites, because English is not going to be your stronger language.

We’re finding with many of those visa workers that they’re in a vulnerable position, particularly if they’re on a student visa, or a working visa. Because if they are seen to be participating in any form of illegal work practice, they’re in breach of their visa conditions and therefore they lose their visa.

And that can be for being complicit in an arrangement that is forced upon you. If you’re being paid cash in hand, or not declaring your hours appropriately, that might be something forced upon you by your employer. But you’re now complicit in breaching your visa conditions, and you could be returned home.

If you look at the very public example of the 7-Eleven case. There were a number of workers there who were on student visas. They were working forty hours a week, and being paid for twenty hours a week.

They were in breach of their visa conditions, because they were on student visas, which restricted them to working only twenty hours.

But ultimately, because they were receiving half pay, they were forced to work beyond those hours. They were in breach of their visa conditions and could have been sent home for reporting the underpayment.

Once these workers do find themselves in a cycle of underpayment, do they also find some of their other workplace rights are being violated as well?

We’ve seen some research from the Fair Work Ombudsman that says if you are being underpaid, then you are more likely to be receiving other forms of illegal work conditions.

There seems to be an association with underpayment, and unregulated working hours, less protection in relation to workers’ compensation, and less protection in relation to occupational work health and safety.

It seems to be that those employers that are willing to underpay their workers are also willing to contravene a whole raft of other employment standards that exist in Australia.

So there seems to be a fairly well-established culture of underpayment out there in the workforce.

Why is there this group of employers who think that they can get away with underpaying employees without fear of consequence?

There’s just no disincentive at the moment for them not trying it on. We can go out there as unions and keep trying to prosecute these employers for doing the wrong thing. But ultimately, all they have to do is pay the money back that they owe.

Unless we develop a disincentive that adds an additional cost burden onto those employers that are doing the wrong thing, we’re just going to see this increasingly rise.

And look, it spirals, because the more employers do it, the more that there is now pressure on other employers to do it as well. So we’ve seen in certain communities, this is also becoming a normalised practice.

There is the example of Mamak in Chinatown. They were prosecuted for underpaying their workers. They were prosecuted twice. They were convicted of it once, and they did it again. And their argument was, “Looking out at the area we’re in, our competitors are underpaying. We have to underpay, in order to be competitive.”

The more that it continues – and it’s allowed to just continue – the less disincentives that there are. We’re going to see more and more employers forced into this practice if they’re going to survive as a business.

That’s why we need to come up with better regulatory mechanisms to prevent this, and better policing of this practice.

So you’re saying that employers that are actually paying the correct wages under the law, are being affected by this practice of underpayment?

Well its profit margins. There is now a downward pressure on wages for those employers that are doing the right thing, because they’re competing with employers that are doing the wrong thing.

So whether it expresses itself by them underpaying, or just raising wages as much as they should, either way this has a negative pressure on the Australian workforce.

What sort of safeguards are there at the moment for employees who are being underpaid? And are many who find themselves in these situations utilising them?

The existing safeguards are through the civil courts, under the Fair Work legislation. Workers do have the right to pursue underpayment in those courts. They don’t have the right to pursue it through the Fair Work Commission.

So as you can imagine, if you go into court, its litigation. It’s technical. It requires a certain amount of expertise to prosecute these underpayments. This is another hurdle for individual workers pursuing their wages.

Obviously, those who have unions are better supported. Because unions are familiar with the environment, have resources and are able to do that.

Non-unionised workers are in a very vulnerable position. Non-unionised workers, who don’t have a strong command of English are at a further disadvantage, because accessing our court system without English is incredibly difficult.

So there are mechanisms there technically in the legal system that we have, but the reality of workers utilising those mechanisms is very rare.

Unions NSW has pointed out that there are some current restrictions in the Fair Work Act that are preventing these underpayment situations from being rectified.

What are the problems with the current legislation? And how does your organisation propose it’s amended?

We’re looking for two key amendments. The first one is the power of unions to inspect employee records. Currently, we have the power to look at the records of union members. So we are able to check whether union members are being paid correctly or not.

What we don’t have is the power to check whether non-union members are being paid correctly. So we go into workplaces – and this happened with 7-Eleven – and we check the union members’ records, and we see that those employees are being paid correctly.

But we cannot be made aware that their colleagues are being underpaid. It makes it very difficult for us to approach those employers and tell them to do the right thing by those other workers.

So we’re looking for a change to the law that allows us to check all workers records, so that we can ensure that a workplace pays correctly.

The other amendment that we are looking for is not an amendment to the Fair Work Act, but an amendment to the Crimes Act. That there should be a criminal law that prevents employers from underpaying workers.

There needs to be a criminal law regarding wage theft. This is theft. Stealing from workers is theft like any other form of theft. And there should be a crime for it. And that will create the disincentive for employers to no longer underpay.

If they risk the same sort of penalty that any criminal does, including a criminal record, and including a severe penalty – beyond compensation – then we’ll start to see a reduction in this type of practice happening.

Thomas thanks very much for taking the time to have this chat with us.

Thanks a lot.