Small business owners fear the Morrison government’s plan to criminalise wage theft may unfairly target those who make “honest mistakes” and are demanding changes to the award system to make it easier for them to pay workers correctly.

Australia’s industrial relations umpire Iain Ross says he understands the concerns, agreeing the system could be difficult to navigate.

“I do think we can do more to assist small business to meet their obligations and I agree with the proposition that most small business owners do try and do the right thing,” said the Fair Work Commission president, who last year launched a review of the nation’s award system.

Council of Small Business Organisations president Peter Strong said if the prime minister went ahead with criminal sanctions, he must also address the “complexity” of the modern award system, which he argued made it too easy to accidentally underpay staff.

Small Business Ombudsman Kate Carnell agreed, calling on Industrial Relations Minister Christian Porter to “simplify” laws and regulations governing pay and conditions as part of his sweeping review of the nation’s industrial relations system.

“We need to make it easier for people to comply with the law,” she said.

Former Masterchef star George Calombaris has said he did not realise the company he is a director of, MADE Establishment, was underpaying staff to the tune of $7.8 million over six years.

The company was last week ordered to repay the wages along with a $200,000 contrition payment, which Mr Porter described as a “light” penalty.

Former ACCC chairman Allan Fels, who chaired the taskforce set up in response to the 7-Eleven underpayment scandal exposed by the Sydney Morning Herald and The Age, rejected the small business lobby’s argument.

Professor Fels said the type of ongoing, deliberate and systemic wage theft the taskforce wanted criminalised was impossible to do by accident.

He wants employers who steal employees’ wages to be fined as much as three times the amount found to have been deliberately underpaid.

“Most of the cases that are reported in the media are of massive underpayment; it is inconceivable these businesses don’t know about it,” Professor Fels said.Loading

“I haven’t heard of too many cases of overpayment.”

Justice Ross, who has described the language used in Australia’s 122 modern awards as “tortuous”, said the painstaking review process was ongoing.

“I expect we will have completed a review of about a third of awards by the end of this year, and that should assist,” he said.

He said the system was already “significantly simpler” than a decade ago, when there were thousands of different awards.

But Ms Carnell said the Fair Work Commission’s internal review was not enough and legislative change was needed.Loading

She said the award system was more complex than many Australians realised and that it was “not the hourly rate” that caught out employers, but the multitude of start times, break times and timing and amount of penalty rates that had to be calculated.

She pointed out that large organisations such as Qantas and the ABC, with their vast human resources teams and payroll departments, still managed to slip up.

Mr Porter said he was still consulting on the new wage theft law, which would not target “those who make what is clearly an honest mistake and which is promptly corrected”.

“It’s clear to me that you do need to have more serious penalties reserved for the most serious types of offending,” he said.Loading

“But where people repeat offend with underpayment; they do so knowingly and in very large amounts – obviously, to the extraordinary disadvantage of their workers, that should have a system where you have the reserved ability to have criminal offences.”

The minister said he was not “necessarily” saying that the MADE Establishment case was “in that category”.

Labor has seized upon the case to attack the government, with shadow treasurer Jim Chalmers saying on Thursday: “It shouldn’t take the revelations about a celebrity chef for the Government to act on wage theft, which has been a problem for some time in our economy and in our community.”

The party’s industrial relations spokesman Tony Burke said Mr Morrison had only announced plans to criminalise wage theft on Wednesday after being accused of “hypocrisy” for pursuing legislation attacking unions.

ACTU Secretary Sally McManus said if an employer accidentally overpaid an employee, they recouped the money “quickly and easily”, while underpaid workers seeking backpay spent years trying to get what they were owed.

“This need to be the first order of business fixing wage theft,” she said.

Extracted from WA Today