Australian businesses could face fines of more than $4 million according to one of 11 consultation papers under consideration by the Department of Employment and Workplace Relations (DEWR).
The paper, titled Compliance and enforcement: Criminalising wage theft, listed penalty options where the maximum fine for individuals could reach $825,000, with a maximum penalty of $4,125,000 to body corporate for employee underpayments or non-payments.
It also indicated imprisonment as a possibility in a question directed to submittees, which read: “What would be appropriate penalties (including a fine and/or a period of imprisonment) for a knowledge-based wage underpayment offence and a recklessness-based wage underpayment offence?”
According to the consultation paper, the underpayment and non-payment of wages in Australia is a growing concern.
“In 2021-22, the Fair Work Ombudsman recovered over half a billion dollars’ worth of underpayments for nearly 385,000 workers, indicating that non-compliance is widespread and requires stronger deterrence through stronger penalties,” the paper read.
In early March this year, Australian department store David Jones and Country Road Group subsidiary Politix were found to have owed about $1.9 million and $2.1 million respectively in back-pay (including superannuation) to more than 7,000 underpaid employees, according to the Fair Work Ombudsman.
Both retail entities have connections with Woolworths Holdings Limited (South Africa), with Country Road Group being a current subsidiary, while David Jones has recently been sold to Anchorage Capital Partners.
The underpayments by both parties, and more broadly in the Country Road Group, were reported by the companies to the Fair Work Ombudsman in September 2020.
The Fair Work Ombudsman said a large majority of back-payments have been made already by both parties.
In February, seven subsidiaries of Wesfarmers Industrial and Safety Pty Ltd (WIS) were tasked to back-pay more than $4.8 million to more than 3,400 underpaid employees nationally and had signed an Enforceable Undertaking (EU) with the Fair Work Ombudsman.
According to DEWR's wage theft consultation paper, some states and territories have introduced, or are considering introducing, existing wage underpayment offences.
Victoria's Wage Theft Act 2020 offers a maximum penalty fine of up to $218,088 or up to 10 years' jail for individuals and a fine of up to $1,090,440 for companies.
In Queensland, wage theft is punishable by a maximum of 10 years imprisonment.
A DEWR spokesperson said it has already received a number of initial written submissions, with more expected by 11:00pm on May 12, 2023 when submissions close.
“Written submissions will not be published," the spokesperson confirmed. "The written submissions will be considered as part of the consultation process in the development of the workplace relations measures currently being considered for the second half of 2023.”
The other 10 consultation papers cover reforms around areas including casual workers, same pay for the same job, and protections against discrimination.