‘Widespread and entrenched’: Migrant worker exploitation could attract jail time

Employers found to have engaged in serious and deliberate underpayment of migrant workers could face jail under a crackdown signaled by the government to introduce criminal penalties into the Fair Work Act.

Industrial Relations Minister Kelly O’ Dwyer has accepted, in principle, all 22 recommendations from a Migrant Workers’ Taskforce report released today, which has advised unprecedented changes to Australia’s workplace law regime.

The taskforce, chaired by former ACCC boss Allan Fels, was set up in 2016 in the wake of migrant underpayment scandals, including at 7-Eleven.

It examined how well Australia’s workplace regulations protect the more than 870,000 migrant visa holders, over half of whom are students.

Delivering a scathing verdict on the current rules, the taskforce recommended unprecedented changes to Australian workplace law, including tougher penalties, an expansion of Fair Work Ombudsman (FWO) powers and the establishment of a national registration scheme for labour-hire firms.

“The problem of wage underpayment is widespread and has become more entrenched over time,” Fels said in the 141-page report.

“Wage exploitation of temporary migrants offends our national values of fairness. It harms not only the employees involved, but also the businesses which do the right thing.”

Jail time on the cards for serious offenders

While the addition of criminal penalties to the Fair Work Act has been opposed by employer groups in the past, the taskforce found there was growing support for the idea, advising their introduction for serious and deliberate breaches.

“A series of serious underpayment cases involving Australian businesses have created a growing perception that the current regulatory model is unable to tackle serious and systemic underpayments of workers,” the taskforce said.

Currently, the Fair Work Act only includes civil penalties for breaches, although Victorian Premier Daniel Andrews has committed to criminalising worker underpayment in his state’s laws.

An introduction of criminal penalties nationwide will introduce the prospect of jail time for employers in serious cases, a move supported by the government.

“The exploitation of workers in Australian workplaces is not only illegal, it harms individuals, undercuts law-abiding employers and reflects poorly on Australia’s international reputation,”  O’Dwyer said in a statement circulated on Thursday.

“Only the most serious and egregious cases would be subject to criminal penalties, not employers that accidentally or inadvertently do the wrong thing.”

Australian small business and family enterprise ombudsman Kate Carnell welcomed tougher penalties, saying they should help level the playing field for small business.

“The migrant workforce is important to small businesses in Australia, particularly in regional areas,” she said in a statement.

“So it’s unfortunate the behaviour of some undermines the reputation of others who play by the rules.”

The Australian Industry Group, which represents a raft of larger employers, doesn’t want criminal penalties to be introduced, saying existing law, recently beefed up to expand penalties, is a sufficient deterrent.

“Implementing criminal penalties for wage underpayments would discourage investment, entrepreneurship and employment growth,” Willox claimed, without saying why this would be the case.

The courts should also be given more power to make adverse publicity and banning orders against those found to have underpaid migrant workers, the taskforce advised.

The government has also agreed to explore a mechanism to exclude employers who are convicted of underpaying a migrant worker from hiring other temporary visa holders for a period of time.

Fair Work Ombudsman to be reviewed

The taskforce also wants a broad-based review of the FWO, asking the government to consider whether the body needs more money.

Such a review would also consider the balance between FWO enforcement and education functions, whether the FWO should change its name, and whether compliance notices are fit for purpose as an avenue for worker redress.

Fair work ombudsman Sandra Parker said she supports all of the taskforce’s recommendations.

“The Fair Work Ombudsman is a firm enforcer of the Fair Work Act and does not tolerate the exploitation of any worker, including migrants, who could be vulnerable,” Parker said in a statement.

The FWO achieved $7.2 million in court-ordered penalties across 35 litigations in 2017-18, but the taskforce took the view this hasn’t sufficiently stemmed migrant underpayment.

The government has been advised to expand the FWO’s information gathering powers so they match those of the ACCC, making it easier to conduct compliance action.

This would do away with a current requirement for the FWO to apply for approval to issue a fair work notice with an Administrative Appeals Tribunal presidential member.

In its response to the taskforce report, the government said it would ensure the FWO is “sufficiently resourced” and has “appropriate powers” to tackle worker exploitation, but did not commit to a specific figure.

FEG access for migrant workers

The Fair Entitlements Guarantee scheme, which provides workers with a taxpayer-supported safety net when a business goes broke, should be extended to migrant workers, the taskforce said.

Workers who “deliberately” avoid their taxation obligations, essentially those working illegally, should not qualify though, and this change should be made only after “cross agency” consultation, the taskforce added.

The government supported an extension of the scheme in its response to the taskforce.

“Where these workers have been doing the right thing by satisfying their taxation obligations, the Government considers it reasonable that they, in turn, be protected by the FEG program. Consultation will soon commence on this proposal,” the government said.

Labour hire overhaul

The taskforce has recommended an overhaul of labour hire, particularly in industries assessed as high risk for exploitation, including horticulture, meat processing, cleaning and security.

It wants a national registration scheme set up, which would get all providers on a list so it’s easier to monitor their compliance with workplace laws.

Host employers in high-risk industries should only be able to use labour hire providers registered with the scheme, the taskforce said.

The taskforce said the scheme should be “light touch”, but advised those found to have contravened the law should be penalised with de-registration.

The government has committed to finalising a model for the scheme, while Labor has already committed to introducing one if elected.

Action will also be taken on employers, labour hire or otherwise, who encourage migrants to breach the terms of their visas, the government said.

The full report can be accessed here.

This article was updated at 12:22PM AEDT March 7 to include additional commentary from employer groups.

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