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Wage Theft Crackdown: Bosses Caught Underpaying Workers Could Be Jailed

Bosses of big businesses responsible for ripping off workers could face jail time or a public name-and-shame register if they continue to underpay their employees.

Retail unions claim the problem of workers being underpaid wages is at an 'epidemic' level, as calls have escalated for tougher penalties.

Some estimates claim up to 13 per cent of workers may have been underpaid.

In recent days, Coles and Target admitted to having underpaid employees by $20 million and $9 million respectively.

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It comes just days after businesses linked to restaurateur George Calombaris were placed into voluntary administration, following major underpayment claims at his Made Establishment.

Headlines surrounding wage theft and underpayments have sparked the federal government to promise to act on the issue.

Attorney-General Christian Porter this week slammed the issue as "incredibly disappointing".

George Calombaris' hospitality empire has collapsed. Image: AAP

"Corporate Australia surely now has got the message that they need to get their house in order. They have had their eye completely off this ball," he said.

The government is expected to soon introduce legislation for tougher penalties to combat the issue, including jail terms.

Porter promised "the most vigorous, robust and complete set of laws around wage underpayment that Australia's ever seen".

A discussion paper from the attorney-general's department this week proposed a public name-and-shame register, or forcing businesses to "display a notice admitting to having underpaid their employees".

Attorney-General Christian Porter wants tougher penalties to combat underpayments. Image: AAP

It comes after a long list of big businesses -- including Woolworths, Bunnings Warehouse, 7/11, Domino's and Qantas -- recently faced underpayment issues involving either wage or superannuation.

What is wage theft?

Maddison Johnstone, a researcher for campaign group Wage Theft Australia, played a key role in exposing issues at 7/11 and Domino's Pizza.

She distinguished between wage theft and underpayment as the former being more deliberate -- such as employees being unfairly asked to work unpaid extra hours -- and the latter as error or negligence.

Image: Getty

"We don't call every underpayment 'wage theft'... but if my boss asks me to come in early or stay late for free, my time and wages are being stolen," she told 10 daily.

"It's not literally stealing money from my purse but it's my time being taken. That's the most valuable thing you can offer."

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The Melbourne-based Young Workers Centre has been running wage theft campaigns for several years, calling for tougher penalties.

YWC director Felicity Sowerbutt said wage theft or underpayment can include not being paid correct wages, not receiving entitlements like superannuation or penalty rates, working unreasonable unpaid overtime, or being asked to work unpaid trial shifts -- a common trend for young workers.

It can also include more nefarious methods such as altering timesheets.

"If a worker puts their hand in the till, that’s a crime, and this is exactly the same," Sowerbutts told 10 daily.

How does wage theft happen?

The Business Council of Australia claims most underpayment issues are accidental, not intentional, last year blaming a "complex" wage system which is "vulnerable to inadvertent payroll mistakes."

Johnstone admitted errors could be made, but said big business should not be making such blunders.

Coles became the latest big business embroiled in a wage underpayment scandal. Image: Getty

"They're big companies valued at billions," she said.

McKell Institute policy expert Edward Cavanough agreed.

"These are businesses with extraordinary HR teams, dozens of people in corporate. I don't buy it. It's negligence. There's rarely incidents of being overpaid," he told 10 daily.

Porter also dismissed the complexity argument, saying on Tuesday "the proposition that all of these incredible, in some cases colossal mistakes ... is because the system is all too hard is something that I fundamentally reject."

How common is it?

The Shop, Distributive and Allied Employees' Association (SDA) union this week called wage underpayment "a full-blown epidemic".

Accounting firm PwC last year reported 13 per cent of Aussie workers are being underpaid each year, to the tune of $1.35 billion annually.

Bosses could go to jail under tougher wage underpayment laws. Image: Getty

Cavanough worried wage theft and underpayment were "becoming more widespread".

"Businesses can say 'sorry', cop a slap and move on," Cavanough said.

"The penalties are too low. Some businesses might think they're better off doing it, even if you're caught, when they look at the penalties."

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What Is Wage Theft And What Can You Do About It?

"It's not a few bad apples, it's a regular practice."

Cavanough claimed the federal government had moved at "glacial" pace on this issue, but welcomed moves flagged by Porter. He also called for the government to better equip the Fair Work Ombudsman to proactively investigate employers, while the SDA claimed the workplace watchdog "does not have the resources" it needs.

10 daily has contacted the FWO for comment.

"We can change laws but if we don't have enough cops on the beat, people won't be caught," Cavanough said.

What is being done?

Sowerbutts said the Young Workers Centre saw current penalties as little more than "a slap on the wrist".

She also called for the watchdog to get better resources and stronger penalties.

wallet cash
PwC estimated underpayment as a $1.35 billion problem. Image: Getty.

"The deterrents are clearly not large enough. The ombudsman can issue on-the-spot fines, but it's often less than the amount of wages that’s been stolen," she claimed.

The attorney-general's department has backed the FWO's work, citing an additional $60 million in funding in recent years, including $20 million this year "specifically to conduct more investigations relating to underpayments."

"Last financial year, the FWO reported significant improvements in the amount of money recovered for employees," the discussion paper said.

The government is expected to introduce further wage theft legislation in coming weeks. The Greens have called for a Royal Commission into wage theft, while the Labor Party spearheaded "a wide-ranging parliamentary inquiry" in the Senate, which will report by June.

The Victorian government is also working on wage theft laws which could see employers jailed for up to 10 years, or companies fined nearly $1 million.