Even as Woolworths was preparing to acknowledge yesterday that it had stolen the wages of nearly 6000 of its employees, it was getting its defence ready: it was because of the complexity and inflexibility of awards. CEO Brad Banducci declared “this is a very complex issue which needs an industry-level dialogue on it”.
Banducci had barely spoken before David Leyonhjelm appeared on the Financial Review site claiming the issue of wage theft was merely a “moral panic” that “originates in Australia’s absurdly complex industrial relation system, with its mess of awards and agreements barely changed from the middle of the 20th century”. Indeed, “the real thief is the government with its excessive taxes”.
This is now a standard defence of business when caught out ripping off their own staff: it’s really hard to follow awards.
As Crikey discussed earlier this month, the hospitality industry has frequently relied on that excuse, despite the radical simplification of awards undertaken by the Rudd-Gillard government in 2010. Another prominent retailer blamed award complexity when admitting it had underpaid staff in July. The Darwin Chamber of Commerce last year blamed complex awards for the fact that 54% of businesses audited by the Fair Work Ombudsman (FWO) were non-compliant with award requirements. One accounting firm has used wage theft as an advertising ploy to sell HR services. Even the federal government, which is currently mulling tougher penalties, gives credence to the idea, noting “we recognise that the industrial relations system is complex”.
For small business, Woolworths provides perfect cover for widespread non-compliance — if a well-resourced major corporation can’t navigate the awards system properly, how can they?
Except, the “award complexity” claim is self-serving nonsense.
It wasn’t award complexity that caused underpayments at George Calombaris’ restaurants. It was employees working up to 70 hours a week but only being paid for 38. It was employees not getting payslips. It was employee complaints being ignored for years.
Accusations levelled at underpayment by Neil Perry’s Rockpool involve tampering with timesheets, not well-intentioned misunderstandings of an award.
The vast wage theft carried out across 7-Eleven stores involved cashback schemes where workers had to return wages paid to them. Caltex underpayment also involved falsified records, as did another recent case. The government’s Migrant Workers’ Taskforce report found that labour hire operators often “create complex operating environments that make it harder to ensure compliance with the law”. Sham contracting is a recurring feature of cases that the Fair Work Ombudsman took to court.
And if award complexity is the main problem, if underpayment could happen in any industry with any kind of award complexity, migrants and temporary workers wouldn’t be disproportionately the victims of it.
“While migrant workers make up 6% of the Australian workforce, they account for 20% of all formal disputes completed by the FWO in 2017-18,” the FWO found last year. Its Harvest Trail investigation of extensive exploitation in the horticulture industry found “overseas workers, particularly those on 417 visas, are more vulnerable to exploitation. The incentive to obtain a second visa… means workers may be willing to accept substandard pay and conditions, and/or be unwilling to seek assistance from the FWO. Unscrupulous employers can use this as leverage to pay less, give notice periods that are outside award conditions and withhold pay.”
Young workers are also disproportionately affected by this so-called award complexity. “Young workers were involved in 28% of the workplace disputes we assisted with,” the FWO noted in 2017. “They are overrepresented in disputes, given workers under the age of 25 account for about 15% of the Australian working population.”
The argument of complexity is particularly risible from larger companies like Woolworths, Bunnings, Wesfarmers, Qantas and Super Retail Group, or chains like Michael Hill, which use complex supply chains, successfully navigate the tax laws to minimise their tax liabilities, or have systems to comply with stringent safety codes and labelling requirements (often operating across different countries). In these markets, complexity in regulation is not a problem, but a barrier to entry protecting these incumbents from new entrants.
That they can effectively navigate and even exploit complexity in other areas but fail to do so when it comes to paying their staff doesn’t show employers struggling with an onerous industrial relations system. It shows where the priorities of those businesses really lie.
With jail sentences for offenders, this may change. But without jail sentences, it won’t change.
Jail AND seriously punitive compensation, AND life bans on directing companies AND loss of professional accreditation, e.g . license to practice as a lawyer or accountant.
Actually, now I come to think of it, the same sorts of penalties should apply for businesses ripping off the environment…
The first step is that the CEO and other top executives at Woolworths should step down and repay their bonuses from all the years of underpayments.
And probably a few board members too.
How long will it be, do you reckon, before a senior manager from a large corporation is actually jailed under these new laws? I wouldn’t hold my breath while waiting.
I reckon if anyone is jailed, it will probably be someone from the local mum & dad pizza shop or similar. People who aren’t major donors to the LNP.
Tampering with timesheets and falsifying records – aren’t these already a criminal offence. That is, fraud?
Exactly Wayne and most of the other examples in this article are, if provable, crimes.
Not mentioned is the common rejoinder that complexity should also result in significant overpayments. I’d suggest the real complexity is the work put into devising and running these wage theft schemes and the manipulation to keep a lid on it.
The article raises another important matter “…complexity in regulation is not a problem, but a barrier to entry…” This is a separate matter but one I suspect is playing some role in Western stagnation. Many workplaces are drowning in process and it’s driving workers bonkers. This is where the rationalisation and simplification is needed. For about two decades more, mostly pointless, process keeps getting added with little or no editing of pre existing process. I’m advocating the opposite of the “get rid of red tape” mantra. Make process workable, effective and concise not the bamboozling arse covering it’s degenerated to.
Maybe some of those very many small businesses which manage to navigate the wage system OK could advise Woolworths how to do it? Clearly Woollies needs better advice.
Indeed!
…… How much are they paying the Woolies executive to mismanage the business?
Wage theft is a gambit to screw down awards.
The smartest guys in the room are too dumb to calculate what they should pay their employees.
Why are they being paid anything then? They should hive up their executive pay packets and start again, preferably on Newstart.
This goes back nearly a decade and it has the smell of not being a ‘mistake’ or an ‘accident’. If that is the case criminal penalties should apply.
I wondered why Woolies would make a big deal about a “Mistake?”.
I read a little more and Bingo, the song and dance and Light show have much more to do with the class action about to be launched against them by the union.
And so, the fanfare was just to distract us all from the fact that they knew months ago that they had underpaid (stolen from) their poorest employees.