Aussie workers underpaid $23 million last year: What’s the cost to those doing the right thing?

Nearly 15,500 Australian workers were underpaid more than $23 million last year, as small business advocates say the majority of SMEs are paying for those who do the wrong thing.

The numbers come as many small business owners continue to react against the pinch of paying penalty rates, urging the Productivity Commission to alter rates as part of its wide-sweeping review of the Australian industrial relations system.

The Fair Work Ombudsman’s annual report for 2013-14 shows the watchdog finalised 25,650 complaints last year and recovered more than $23 million for 15,483 workers.

The industries to generate the most complaints to the ombudsman were hospitality, construction and retail.

The Fair Work Ombudsman also recovered $1.1 million for working visa-holders last financial year, highlighting the number of overseas workers getting stung by dodgy Aussie employers.  

Peter Strong, executive director at the Council of Small Business of Australia, told SmartCompany the stats show the vast majority of small businesses are doing the right thing.

“These people make it hard for the rest of us,” says Strong.

“What this does do, unfortunately, is give people ammunition to attack us all. It gives the impression the workplace is a place of war, a place of conflict, and it’s not,” he says.

Strong believes businesses avoiding paying penalty rates is detrimental to competition, especially in industries such as hairdressing, which he says is well-known for some operators undercutting competitors by paying cash.

“It makes it hard for the honest ones and hard on everyone,” he says.

Strong says the numbers show less than 1% of employers are getting it wrong, despite a complicated industrial relations system, and says “most small businesses are terrified of doing the wrong thing”.

“If people do the wrong thing, we need to ask ‘why?’ If they pay cash on Sunday, is it because a worker has come to them and said, ‘I need the work’, and they can’t afford to pay penalty rates? Then the problem is with the system,” he says.

The report also shows in 2013-14, the ombudsman initiated 37 civil penalty litigations, resulting in court-ordered penalties totalling $3,046,380.

The majority of litigations (81%) related to wages, conditions and failure to comply with a compliance notice.

The annual report also highlights the watchdog’s record-breaking $343,860 penalty secured against a cleaning company for deliberately underpaying six vulnerable workers at the end of 2013.