“A bargaining chip”: Morrison government withdraws underpayment provisions in heavily amended IR bill

The Morrison government has ditched the underpayment provisions in its industrial relations omnibus bill, which would have cracked down on serious cases of wage theft with bigger penalties.

The heavily amended industrial relations package, which passed the Senate yesterday, only includes one of the five key reforms it first contained.

While changes to casual employment were passed, the Morrison government abandoned widely supported provisions related to underpayment as well as changes to awards, enterprise bargaining and greenfields agreements.

Associate professor of industrial relations at the University of Sydney’s business school, Angela Knox, says the government’s “unwillingness to protect workers’ wages” is a “missed opportunity” to prevent the issue of underpayment from worsening.

On top of increasing civil penalties and adding a new criminal penalty for severe cases of underpayment, Knox says the provisions would have given workers access to better legal recourse to recover wages.

“These kinds of provisions would have levelled the playing field much more effectively,” Knox says.

“A bargaining chip”

The Coalition needed Centre Alliance Senator Stirling Griff to support the industrial relations bill for it to pass the Senate in the final sitting week before May, when the budget will be on the agenda.

Senator Griff opposed the proposed changes to enterprise bargaining, awards and greenfields agreements, leaving the government with little choice but to withdraw those parts of the bill.

However, in an unexpected move, the government also withdrew the wage underpayment provisions.

Knox says the Coalition deliberately withdrew underpayment laws so they can be used “as a bargaining chip with the other provisions that they’ve also held back”.

“[The government] will come back to the provisions that they held back and use them as a package to bargain tit-for-tat,” she says.

“And, because the compliance and underpayment provisions were so widely accepted, that’s a very powerful bargaining chip for them to retain.”

War of words

Amid final negotiations and amendments in the Senate, the Council for Small Business Organisations Australia (COSBOA) and the Australian Council of Trade Unions (ACTU) struck their own deal related to casual employment.

They agreed on the requirement for employers to offer long term casual employees permanent work, and the option for casual employees to seek arbitration if claims for retrospective back pay in specific circumstances were denied.

Their agreement was put to the crossbenchers to encourage them to support those parts of the bill.

However, business groups including the Australian Chamber of Commerce and Industry and Australian Industry Group (Ai Group) were angered by the deal between COSBOA and the ACTU.

In a statement on Thursday, Innes Willox, chief executive of Ai Group said the amendments COSBOA and the ACTU agreed to “would be very damaging for small and large businesses”.

Willcox claimed the amendments would allow ‘double-dipping’ claims by employees who have been engaged and paid as casuals.

“The cost risks for employers of ‘double dipping claims’ are up to $39 billion,” he said.

COSBOA chief executive Peter Strong rebutted those criticisms, saying that most casual workers would not desire permanent work, and the so-called double dipping claims would rarely make it to arbitration.

“The problem is the big business associations, who claim to represent small business, don’t. They’re representing labour hire firms,” Strong tells SmartCompany.

“What we focus on is the reality of a small business, and how we can make it less risky to employ someone and better for the worker,” he says.