Labor's hit list – shammers, 'unscrupulous' bosses


Labor's hit list – shammers, 'unscrupulous' bosses

Reforms targeting workers rights and “unscrupulous” employers are the centrepiece of the federal opposition’s policy platform it will take to the next election.

Reforms targeting workers' rights and “unscrupulous” employers are the centrepiece of the federal opposition’s policy platform it will take to the next election.

Opposition leader Bill Shorten and Shadow Minister For Employment And Workplace Relations Brendan O’Connor released their employment strategy today, promising stronger legal protections and harsher penalties for deliberately underpaying workers and engaging in sham contracting. 

Labor says it is motivated by recent cases of “widespread worker exploitation”, picking out examples of sham contracting where Myer sub-contracted cleaners were paid flat rates below award wages and no entitlements, 7-Eleven stores doctoring pay records to disguise underpayments, Pizza Hut delivery drivers being paid $6 per hour and underpayment of foreign workers at the Baiada Group food processing factories.

Labor’s pitch focuses on four areas:
  • increased penalties for underpayment
  • sham contracting
  • phoenix employers
  • exploitation of migrant workers.

Increased penalties for underpayment

Penalties for employers who underpay workers would rise steeply from the current penalty of $10,800 for an individual to an amount equal to three times the underpayment or $216,000, whichever is highest. Fines for corporations would rise also rise steeply from the current $54,000 to $1,080,000.

Shorten said Labor would consult with employers and workers, and their representatives, over the scale of these increases and their effectiveness as a deterrent.

They will also consuIt over a suggested new criminal offence for employers who  “intentionally or recklessly seriously rip off workers”, with accompanying penalties of $43,200 or two years' imprisonment for an individual and $216,000 for corporations. 

Labor’s platform also includes giving courts the power to disqualify directors.

Sham contracting

Labor proposes to change the sham contracting test in the Fair Work Act so that if a reasonable person would think someone is an employee, then the person must be treated as an employee. Currently the Act provides an exemption where the employer maintains it did not know the worker was really an employee.

Labor says its policy will implement the recommendation of the 2015 Productivity Commission report and the 2012 Fair Work Review Panel report, both of which found it was too easy for employers to escape prosecution for sham contracting. It also promises it will develop a clear definition of what is an independent contractor to “provide certainty to workers and employers”.

Workers would also be protected from dismissal or discrimination flowing on from questioning their employment/contractor status.

Labor is also proposing to increase the penalties for sham contracting to the same level as for underpayments, again promising to consult over the appropriateness of the amount. It also promises to consult over introducing a new criminal offence  where an employer intentionally or recklessly and seriously engages in sham contracting, with accompanying penalties of $43,200 or two years' imprisonment for an individual and $216,000 for corporations.

Again, as with underpayments, directors could be disqualified.

Phoenix employers

The Fair Work Ombudsman would be given increased powers to pursue employers who liquidate their companies in order to avoid paying worker entitlements.

Company directors will be made personally liable for debts in relation to outstanding compensation owing to workers or civil penalties owing in respect of breaches of the Fair Work Act.

Exploitation of migrant workers

Citing concerns over the exploitation of temporary overseas workers and the incentive this provides to avoid employing local workers, Labor is proposing new specific penalties.

A new criminal offence will apply to anyone who deliberately exploits temporary overseas workers, even if they are employing the worker in accordance with the terms of their visa. 

Penalties of  of $43,200 or two years' imprisonment for an individual and $216,000 for corporations will apply. 

To remove the incentive to employ illegal workers, ie those without any visa, these workers will be given an avenue to take action to recover owed wages and entitlements. Currently such workers are unable to take action under the Fair Work Act. 

Employers will also be required to provide a “Temporary Overseas Worker Support Pack”, providing information in the worker’s native language on Australian employment entitlements, to all workers on temporary visas when they commence work. The Fair Work Ombudsman would develop and publish these materials. 

Employers will be fined up to $10,800 ($54,000 for a corporation) for not providing the pack.

Further information

See: Details of Labor’s policy 
See also: What a sham: are you doing the wrong thing?
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