The Morrison government has agreed to introduce unprecedented criminal sanctions for employers who seriously exploit workers and a national registry scheme to crack down on unscrupulous labour hire firms.

Minister for Jobs and Industrial Relations, Kelly O’Dwyer, will announce the measures on Thursday as part of the Coalition’s in-principle agreement to all 22 recommendations from the Migrant Workers’ Taskforce Report.

The taskforce was chaired by former competition head Allan Fels and set up in October 2016 after reports of systemic underpayment of migrant workers in 7-Eleven and the horticulture industry. It delivered its report to government last month.

The 141-page report concluded “the problem of wage underpayment is widespread and has become more entrenched over time”, with the most comprehensive survey showing as many as half of temporary migrant workers may be underpaid.

It recommended increasing penalties for underpayments so they are more in line with consumer laws and introducing criminal sanctions for serious exploitation to provide a “clear signal” to employers that such conduct is not acceptable.

The sanctions, which could include prison, community service or fines, would apply to both local and migrant worker cases and cover “clear, deliberate and systemic” exploitation rather than inadvertent underpayments.

Employer groups have strongly opposed criminal sanctions for underpayments in part because of the longstanding approach not to criminalise workplace relations matters.

But the Coalition’s response represents a significant split from this view. It goes further than federal Labor, which favours increasing penalties for deliberate underpayments rather than criminal sanctions.

The federal government said it would consider the circumstances and appropriate vehicle for criminal penalties after the taskforce noted the Fair Work Act may not be suitable due to its civil penalty regime.

“The exploitation of workers in Australian workplaces is not only illegal, it harms individuals, undercuts law-abiding employers and reflects poorly on Australia’s international reputation,” Ms O’Dwyer said.

“The Coalition Government has no tolerance for those who repeatedly and deliberately underpay workers, whether they are an Australian or a worker on a visa.

“For the very first time we will introduce criminal sanctions for the most serious and egregious forms of deliberate exploitation of workers.”

The government will also finalise a model for a national labour hire registration scheme in four high risk sectors – horticulture, cleaning, security and meat processing – to stop rogue operators and exploitation of migrant workers.

According to the report, the scheme should be “light touch” and impose a low regulatory burden for labour hire operators to join the scheme but potentially cancel their registration if they breached relevant laws. Host employers in the four industries would have to use registered operators.

Labor has promised to introduce its own national labour hire licensing scheme if elected and the Palaszczuk government has already set up a state system in Queensland. Nationals MPs have also supported a labour hire licensing scheme in Senate inquiries into migrant worker exploitation.

Migrant workers should access FEG

The government will also consider granting migrant workers access to the Federal Entitlements Guarantee, which covers workers’ unpaid entitlements when their employer goes bust.

“Where these workers have been doing the right thing by satisfying their taxation obligations, the Government considers it reasonable that they, in turn, be protected by the FEG program. Consultation will soon commence on this proposal,” the Coalition’s response said.

Other taskforce recommendations included making it an offence to knowingly coerce a migrant worker to breach their visa conditions and increasing the penalties for wage underpayments to be “more in line with those applicable in other business laws, especially consumer laws”.

Ms O’Dwyer noted the government had recently changed workplace laws to increase fines for underpayments to up to $550,000 and would review their effectiveness once they had time to take effect.

The Fels report also took to task the Fair Work Ombudsman, which it said was not well understood by migrant workers and needed to conduct more enforcement and litigation actions rather than mediation.

“There needs to be a much stronger enforcement response than has been evident to date,” the report said.

The minister said the government had recently provided the FWO with $14.4 million to address migrant workers on top of its $20.1 million funding in 2016-17.

Extracted from AFR