Employer groups warn against underpayment and an uneven playing field

Frances Johns thought she had gained a job but in fact was doing an unpaid “trial” shift at Bella Portofino in Wollongong. Photo: Janie Barrett Blake Roberts worked at Bella Portofino in Wollongong, where he was underpaid. Photo: Janie Barrett

Ashleigh Mounser was underpaid in numerous jobs in Wollongong Photo: Janie Barrett

Peak employer groups have warned business owners against systematic underpayment of workers because it is creating an uneven playing field for those paying lawful wage rates.

Responding to Fairfax Media’s investigation into the rampant underpayment of young people in restaurants, cafes and retail, James Pearson, chief executive officer of the Australian Chamber of Commerce and Industry said employers should fulfil their legal requirements to avoid creating unfair competition.

“Thankfully most employers do the right thing, but employers that cut corners hurt operators that play by the rules, posing unfair competition,” Mr Pearson said.

“Workplace regulation is a complex web of rules and requirements that many small business owners struggle to navigate without legal help, so non-compliance is not always deliberate.”

Businesses that breach national employment standards and awards face penalties of up to $54,000, back payments and damage to reputation.

Australian Retailers Association executive director Russell Zimmerman said his organisation was also concerned about the creation of an “unlevel playing field”.

“It does make it very difficult if you are paying the right amount of money in wages and costs to compete with someone who is not,” he said

Mr Zimmerman said the payment of wages in cash meant employees were also in a precarious position in relation to workers’ compensation.

While not excusing the exploitation of young people on under-award wages, Mr Zimmerman said one of the reasons it was happening was because “the cost of labour is so expensive”.

“We do believe Sunday penalty rates are too high, but that is not an excuse for what they are doing,” he said.

Jo-anne Schofield, the national secretary of United Voice, the union representing hospitality workers, said the underpayment of young people in Wollongong was part of a national problem.

“Wollongong is not isolated, it is a systematic problem,” she said.

“Employers are increasingly building systematic underpayment into their business model.

“In hospitality there is a double whammy where people are being ripped off and on the other hand there is a concerted effort from employers to cut weekend rates.”

Ms Schofield said the rights of unions to inspect the books have been wound back in the past decade.

“As union rights around responsible right of entry and inspection and also being able to talk to workers are being wound back, we are just seeing an explosion in exploitative work practices,” she said.

“It also punishes companies doing the right thing.”

Federal Minister for Employment Michaelia Cash said exploitation of workers in Australia, whether domestic or foreign, is “unlawful, wrong and will not be tolerated”.

“That is why the Coalition has implemented, and will continue to implement, a range of measures to ensure that workers are aware of their rights and employers who seek to exploit workers are investigated and punished appropriately,” she said.

“The Government’s Policy to Protect Vulnerable Workers includes amendments to the Fair Work Act to provide strengthened protections for vulnerable workers, an additional $20 million to the Fair Work Ombudsman to enforce workplace laws, and a taskforce chaired by Professor Alan Fels to identify and rectify instances of the exploitation of migrant workers.”

Federal Labor’s workplace relations spokesman Brendan O’Connor said the government had failed to stop companies doing the wrong thing.

“Worker exploitation in Australia is systemic and occurring far too often, yet for three years the Abbott-Turnbull Government had the chance to legislate changes to ensure workers do not get ripped off, and they failed,” Mr O’Connor said.

“At a time when youth unemployment is at record highs, wage growth is at record lows, only Labor has introduced legislation to prevent workers being exploited”.

Fairfax Media has reported on the underpayment and non-payment of young workers on trial shifts after University of Wollongong graduate Ashleigh Mounser untapped a deluge of complaints from more than 60 students who have shared similar stories of underpayment in Wollongong cafes and restaurants. Academics say the underpayment and unpaid work trials is a growing national scandal.

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