A fair day’s pay for a fair day’s work? Exposing the true cost of wage theft in Queensland Report No. 9, 56th Parliament Education, Employment and Small Business Committee November 2018 Education, Employment and Small Business Committee Chair Ms Leanne Linard MP, Member for Nudgee Deputy Chair Mrs Jann Stuckey MP, Member for Currumbin Members Mr Bruce Saunders MP, Member for Maryborough Mrs Simone Wilson MP, Member for Pumicestone Mr Michael Healy MP, Member for Cairns Mr Nick Dametto MP, Member for Hinchinbrook Committee Secretariat Telephone +61 7 3553 6657 Fax +61 7 3553 6699 Email [email protected] Committee webpage www.parliament.qld.gov.au/EESBC Acknowledgements The committee acknowledges the contributions of Mr Don Brown MP, who participated in a number of the committee’s hearings and meetings during the inquiry, including many of the committee’s hearings in various regional locations across Queensland. The committee also acknowledges the assistance provided by the Queensland Office of Industrial Relations, the Queensland Parliamentary Library and Research Services, the Fair Work Ombudsman, the Australian Taxation Office, and the Australian Securities and Investments Commission. Inquiry into wage theft in Queensland Contents Abbreviations iv Glossary vii Chair’s foreword ix Recommendations x 1 Introduction 1 1.1 Role of the committee 1 1.2 Inquiry referral and process 1 1.3 Submissions 2 1.4 Online survey 2 1.5 Briefings and hearings 2 1.6 Parliamentary privilege and the right of reply 3 1.7 Inquiry material 3 1.8 Inquiry background 4 1.9 Report structure 7 2 Current regulatory framework 9 2.1 Queensland industrial relations system 9 2.1.1 Office of Industrial Relations 11 2.1.2 Queensland Industrial Relations Commission 12 2.1.3 Labour hire licensing 12 2.2 The Fair Work System 13 2.2.1 The safety net and other protections 14 2.2.2 Fair Work Ombudsman 16 2.2.3 Fair Work Commission 17 2.3 Superannuation Guarantee 17 2.3.1 Australian Taxation Office 18 2.4 Insolvency 19 3 Defining wage theft 21 3.1 Forms of wage theft 22 3.2 Other concerning practices 23 4 Incidence of wage theft 25 4.1 Available statistics 26 4.2 Reported wage theft 26 4.2.1 Office of Industrial Relations 27 4.2.2 Fair Work Ombudsman 27 4.2.3 Australian Taxation Office 30 4.2.4 Other reports and findings 31 4.3 Vulnerable cohorts 33 4.3.1 Migrant workers and visa holders 34 4.3.2 Young workers 36 4.4 Vulnerable industries and sectors 37 4.4.1 Accommodation and food services 39 4.4.2 Horticulture 40 Education, Employment and Small Business Committee i Inquiry into wage theft in Queensland 4.4.3 Food processing 41 4.4.4 Construction 41 4.4.5 Cleaning and security 42 4.5 Regional variation 43 4.6 Further research 45 5 Survey results – What Queenslanders said 46 5.1 Survey sample 46 5.2 Experiences of wage theft 47 5.2.1 Time of experience 47 5.2.2 Location of wage theft 47 5.2.3 Employment status 47 5.2.4 Types of wage theft 48 5.2.5 Industries affected by wage theft 50 5.3 Reporting of wage theft 53 5.4 Summary 55 6 Impacts of wage theft 56 6.1 Impacts on individuals and families 57 6.1.1 Financial impacts 57 6.1.2 Emotional and health impacts 60 6.2 Impacts on businesses and the economy 62 7 Forms of wage theft experienced 67 7.1 Underpayment of wages 67 7.1.1 Unpaid trials 69 7.2 Unpaid superannuation 70 7.3 Unpaid penalty rates 72 7.4 Unreasonable deductions and withholding of other entitlements 73 7.5 Sham contracting 75 7.6 Insolvency 76 8 Reasons why wage theft occurs 77 8.1 An honest mistake 77 8.2 Commercial gain – a business model? 79 8.3 Lack of worker awareness 84 8.4 Power imbalance 85 8.5 Lack of documentation 86 8.6 Worker non-reporting 87 8.6.1 Intimidation and reprisals 90 8.7 Cash economy 92 9 Promoting compliance 94 9.1 Education and awareness 94 9.1.1 Current education and awareness services 94 9.1.2 Stakeholder proposals 97 9.2 Proactive compliance measures 104 9.2.1 Licensing and registration 104 ii Education, Employment and Small Business Committee Inquiry into wage theft in Queensland 9.2.2 Business registration – the Australian Business Register 108 9.2.3 Procurement and supply chain policies 110 10 Role of industrial organisations 113 10.1 Unions 113 10.2 Employer and industry associations 119 11 Reporting and recovery 123 11.1 Claims process 123 11.2 Reporting and interactions with agencies 125 11.2.1 Mediation processes 126 11.2.2 Court processes 128 11.3 Insolvency 135 11.3.1 Access to the Fair Entitlements Guarantee 137 11.4 Community service providers and other organisations 143 12 Enforcement and deterrence 147 12.1 Enforcement actions 147 12.1.1 Fair Work Ombudsman 147 12.1.2 Australian Taxation Office 158 12.1.3 Office of Industrial Relations 161 12.1.4 Australian Securities and Investments Commission 163 12.1.5 Agency Collaboration 164 12.2 Fair Work Commission 165 12.3 Sham contracting 166 12.4 Civil penalties 169 12.5 Criminalisation 171 12.6 Naming and shaming 175 13 Other jurisdictions 177 13.1 Australian jurisdictions 177 13.2 International jurisdictions 179 14 Exploitation of legal framework 181 14.1 Workplace agreements 181 14.1.1 Termination of workplace agreements 181 14.1.2 ‘Zombie agreements’ 183 14.2 Precarious employment and the gig economy 187 14.2.1 Casualisation of the workforce 187 14.2.2 Gig economy 188 14.3 Illegal phoenixing activity 191 15 Other concerns 195 Appendix A – Submitters 197 Appendix B – Officials at public departmental briefing 199 Appendix C – Witnesses at public hearing 200 Appendix D – Survey Questions 205 Statement of Reservation 212 Education, Employment and Small Business Committee iii Inquiry into wage theft in Queensland Abbreviations ABC Australian Broadcasting Corporation ABN Australian Business Number ABS Australian Bureau of Statistics ACT Australian Capital Territory ACTU Australian Council of Trade Unions Ai Group Australian Industry Group ALHR Australian Lawyers for Human Rights AMIEU Australian Meat Industry Employees’ Union AMWU Australian Manufacturing Workers Union ASIC Australian Securities and Investments Commission ATO Australian Taxation Office BFVG Bundaberg Fruit and Vegetable Growers BOOT Better Off Overall Test CEO Chief Executive Officer CFMEU Queensland Construction, Forestry, Mining and Energy Industrial Union of Queensland Commissioner Commissioner of Taxation Committee Education, Employment and Small Business Committee Corporations Act Corporations Act 2001 (Cth) Department Department of Education (includes the Office of Industrial Relations) EBA Enterprise Bargaining Agreement EERC Education and Employment References Committee ELICOS English Language Intensive Courses for Overseas Students ETU Electrical Trades Union FEG Fair Entitlements Guarantee FEG Act Fair Entitlements Guarantee Act 2012 (Cth) FWA Fair Work Act 2009 (Cth) iv Education, Employment and Small Business Committee Inquiry into wage theft in Queensland FWC Fair Work Commission FWO Fair Work Ombudsman GST Goods and services tax HIA Housing Industry Association IEU Independent Education Union IGT Inspector General of Taxation Inquiry Inquiry into wage theft in Queensland IR Act Industrial Relations Act 2016 (Qld) IR Claims Industrial Relations Claims JobWatch JobWatch Inc. LHLCU Labour Hire Licensing Compliance Unit MEA Master Electricians Australia National Temporary Laurie Berg and Bassina Farbenblum, Wage Theft in Australia: Findings of Migrant Work Survey the National Temporary Migrant Work Survey, University of Technology Sydney, University of NSW Law, and the Migrant Worker Justice Initiative, November 2017. NES National Employment Standards under the Fair Work Act 2009 (Cth) NRA National Retail Association NSW New South Wales NUW National Union of Workers OIR Office of Industrial Relations POQA Parliament of Queensland Act 2001 (Qld) QAI Queensland Advocacy Incorporated QCA Queensland Community Alliance QCAT Queensland Civil and Administrative Tribunal QCU Queensland Council of Unions QIRC Queensland Industrial Relations Commission QLS Queensland Law Society Education, Employment and Small Business Committee v Inquiry into wage theft in Queensland QNMU Queensland Nurses and Midwives’ Union QTIC Queensland Tourism Industry Council ROC Registered Organisations Commission Entity R&CA Restaurant & Catering Australia Senate EERC Senate Education and Employment References Committee (Parliament of Australia) SG Superannuation Guarantee SGA Act Superannuation Guarantee (Administration) Act 1992 (Cth) SGC Superannuation Guarantee Charge Standing Orders Standing Rules and Orders of the Legislative Assembly TWU Transport Workers Union US United States VET Vocational Education and Training Work Choices Workplace Relations Amendment (Work Choices) Act 2005 (Cth) YWAS Young Workers’ Advisory Service YWH Young Workers Hub vi Education, Employment and Small Business Committee Inquiry into wage theft in Queensland Glossary Better Off Overall A test applied by the Fair Work Commission to determine whether to Test (BOOT) approve a proposed enterprise agreement or other registered agreement. For the agreement to be approved, the award-covered employee must be better off overall under the registered agreement than they would be under the relevant modern award. See page 15. Enterprise Enterprise agreements are agreements between employers, employees agreements and employee representative organisations (such as unions) which set out mutually accepted terms and conditions of employment. Most enterprise agreements set out: • wage rates • employment conditions (e.g. hours of work, meal breaks, overtime) • a consultation process • dispute resolution procedures • deductions from wages for any purpose authorised by an employee. To be approved by the FWC, enterprise agreements must pass the 'better off overall' test (BOOT). Enterprise bargaining Enterprise bargaining is the process of negotiation generally between the employer, employees and their bargaining representatives with the goal of making an enterprise agreement.