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The minimum wage increases, as big wage theft cases loom

Just as the Fair Work Commission agrees to raise the minimum wage, two companies have had massive wage theft suits filed against them.

The Fair Work Commission has announced it’s raising the minimum wage by 3.5 per cent. This is below the Australian Council of Trade Union’s goal of 7.2 per cent, but above the Australian Industry Group’s call for an increase of 1.8 per cent (the Consumer Price Index increased by 1.9 per cent in the last year).

Making the minimum wage $18.93 an hour and $719.20 a week was argued as justified by the FWC panel by a promising economic outlook. They also took into account the fact that a lower unemployment rate has “not translated to stronger wages growth”.

As to the employer argument that minimum wage increases negatively affect workers and employment in general, the panel took into account recent research by the Reserve Bank of Australia. It found “no evidence that these small, incremental increases in award wages have an adverse effect on hours worked or the job destruction rate”. (Job destruction essentially means job disappearance within a certain period).

The research, conducted by James Bishop, looked at data from 1998-2008. The fact that there was no evidence of job losses due to wage increases is particularly interesting, as it undercuts employer groups’ arguments.

Multi-million dollar wage theft cases

In related news, two huge marketing firms – AIDA and Credico – are now the subject of class actions worth millions of dollars. On the behalf of door-to-door and direct sales workers, Adero Law and the National Union of Workers filed the cases in Federal court on Monday.

The cases allege that the companies deliberately tried to avoid paying the minimum wage, as well as overtime and other benefits, by misclassifying employees as contractors. Most Australians in capital cities would be be familiar with these types of workers, as they can be typically seen in shopping centres raising money for major charities or doing sales work for companies like Telstra, Optus and Foxtel.

While the initial action is only for 100 workers, NUW assistant branch secretary Godfrey Moase says there is a larger campaign planned. Other companies will be investigated and Moase told the Sydney Morning Herald, “It will end up being thousands of workers.”

“There are two related issues, one is wage theft, where a lot of these workers were paid $3 to $5 an hour and the second is theft of time, they were often working 60-70 hours a week to try to make any sort of living.”

Credico has previously denied any wrongdoing, but the public prosecution is getting ahead of both them and AIDA. In a different SMH article, the reporter interviews a former worker, Karina Smith. She alleges that she earned an average of $300 to $400 a week. “I had no control over my working life, the hours I worked or the clients I dealt with,” she said.

If this last allegation is true, then it will be difficult to argue she wasn’t an employee.

The future of low-wage workers

The public outcry over such cases results in more than just bad optics for the companies involved. Wage theft is consistently in the mainstream media (HRM has written about a few of the bigger cases) and, combined with wage stagnation, is contributing to an impression that we’re living in an employers’ world.

And whether or not that impression is accurate, it’s become prevalent enough that we’ve seen not only the minimum wage increase, but the Victorian Labor government vowing to pass laws criminalising the worst offences of wage theft. The laws would also introduce new fines of nearly $200,000 for individuals and almost $1 million for companies.

In a previous article, HRM revealed there are mixed feelings as to whether criminalisation is a good idea – several legal experts concurred that it isn’t for any number of practical reasons. But government policy isn’t made in a vacuum. And there’s more than enough evidence to assume that Australia’s industrial relations system will be unsettled for the foreseeable future.

Stay up to date on the legislative and regulatory changes that influence your organisation’s risks, rights and responsibilities with the AHRI short course ‘Managing the legal issues across the employment life cycle’.

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Paul Steele
Paul Steele

It is becoming increasingly apparent as modern organizations are being driven more and more through adherence to a bottom line outcome, especially so when management has bonuses linked to the achievement of those same bottom line outcomes. As a business community here in WA, and Australia generally, it is perhaps time to reconsider the basic top-down business model in use. Management would find it quite difficult to achieve outcomes without workers and equally, workers are dependant on management to organise and co-ordinate resource availability. A better business model needs to reflect the interdependent and interactive relationship between the two for… Read more »

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