Employers in Australia to be penalised for underpaying wages

The Australian government is poised to enact significant changes to workplace legislation in a bid to close perceived “loopholes”, a move that has ignited opposition from employer groups who are concerned about potential increases in operating costs.

Tony Burke, Australia’s Minister for Employment and Workplace Relations, has tabled a bill that seeks to criminalise deliberate employee underpayment, imposing penalties of up to 10 years in jail and fines of up to A$7.8 million (US$5 million).

Burke clarified that these penalties would not apply to employers who can demonstrate that their underpayments were due to honest mistakes. The details of the forthcoming legislation have not yet been disclosed. However, Burke outlined the broader objectives of the bill, which encompass not only criminalising “wage theft” but also facilitating the transition of casual employees into permanent roles, addressing labour hire practices that undercut minimum pay rates, and implementing minimum standards for gig economy employees, including those in food delivery and rideshare apps.

In a recent interview with the Australian Broadcasting Corporation, Burke sought to downplay the potential impact on organisations, asserting that it would be minimal, though acknowledging that “there are some people who will have to pay more.” The proposed legislation would exempt organisations with fewer than 15 employees from certain provisions, he added.

READ MORE: Australia’s gig economy set for major reform

However, these reforms have sparked opposition from employer organisations. Jennifer Westacott, Chief Executive of the Business Council of Australia, labelled the proposed changes as “unworkable”, and said, “It’s going to add to cost, add to complexity, make it harder to get casual work, make it harder to employ people.”

The Australian Chamber of Commerce and Industry has also voiced apprehension, contending that the new laws could curtail independent contracting arrangements and pose a threat to the viability of online food delivery and rideshare services, reported Reuters.