Employers and legal experts have said a union deal to immunise employers from civil penalties if they inadvertently underpay workers but quickly backpay them is a significant and pragmatic walk back from their hard line on wage theft.

ACTU secretary Sally McManus revealed the concession this week as an example of consensus reached in the industrial relations talks and one she expected to be reciprocated when the reforms are finalised by the end of the month, warning the government not to bow to employer pressure for unilateral changes that would cut pay.

Industrial Relations Minister Christian Porter, left, and ACTU secretary Sally McManus, centre. at a meeting of the industrial relations working groups. Louise Kennerley

Council of Small Business Organisations Australia chairman Mark McKenzie agreed unions had shifted their position from a hard stance on all underpayments as “wage theft” to a compromise that would ensure faster compensation.

“We’re really getting to an area of pragmatism in saying there have been problems in the past in terms of complexity and, in some cases, of wilful blindness and we need measures to deal with both,” he said.

The government has committed to criminal sanctions for the most serious and deliberate underpayments and is also considering raising the existing civil penalties, which would apply in cases of “wilful blindness”.

Mr McKenzie said in the IR talks unions had recognised that payroll software to monitor compliance could address underpayment issues and award complexity but also “accepted a ‘reg tech’ solution would take years”.

“And when you’re dealing with an economic recovery you need something to deal with in the interim,” he said.

University of Melbourne professor in labour law John Howe said “it seems a major concession by the ACTU”.

Trade-off

“But if it’s coupled with an avenue of informal resolution of these matters with the Fair Work Commission then I can see there is trade-off there, where they get something that is going to benefit both employers and workers because it’s a much lower-cost administrative option,” he said.

Unions have previously advocated for a fast and low-cost small claims jurisdiction, like the commission, in which underpayment victims can overcome “access to justice” hurdles in getting backpay.

However, Professor Howe said the big issue with immunity in return for backpay would be distinguishing between employers who are just making inadvertent payments and what would be “wilful blindness”.

“There are obviously a lot of businesses where there is an inadvertent error but we know there are also a lot of employers where wage theft is part of their business model,” he said.

“What are you going to put in place so those businesses don’t leverage the ‘inadvertent’ loophole?”

The “coming together” of employers and unions also largely formalises what regulators and the courts already do in practice.

When underpayments are in error, rather than reckless or deliberate, regulators will not take legal action and judges use their discretion to not impose civil penalties on a business.

“This will take away the need for that discretion,” Mr McKenzie said.

“That’s fair enough but at the same time we need to see commensurate improvements in terms of simplicity of award payment structures.”

United Workers Union, representing hospitality, and the Shop Distributive and Allied Employees Association, for retail, declined to comment.

However, Josh Cullinan, secretary of the Retail and Fast Food Workers Union, which is not part of the ACTU, said he found the concession “bewildering”, saying it merely represented the status quo and was unlikely to provide an enticement for employers to make faster back-payments.

“Every week we deal with underpayments, some of it deliberate, some of it not, and the vast majority of it gets resolved by the wages being paid and there is no litigation against the employer … but it’s happening because there is a penalties regime,” he said.

“It’s baffling that an organisation that purports to represent workers would suggest limiting penalties or their application.”

Extracted in full from: https://www.afr.com/work-and-careers/workplace/union-deal-on-wage-theft-major-concession-20201013-p564ll