What would it take to see hospitality wage thieves held to account?

We knew it would happen again, we just didn’t know it would be so soon.

Days after the revelation of George Calombaris’ MAdE Establishment stealing nearly $8 million from its staff, another celebrity chef, Neil Perry, is facing allegations of overwork and underpayment at his high-end restaurant, Rockpool. As Crikey noted last week, wage theft is rampant in the hospitality industry, whether it’s fine-dining or your local sushi joint.

Crikey takes a look at some of the reasons hospitality is such a hotbed for employee exploitation, and what can be done about it. 

Wage theft still hasn’t been criminalised

Currently, wage theft is a civil offense. Fair Work recommends employees who think they’ve been underpaid address their employer directly. But given most hospitality workers are employed casually, with no reason or warning needed to have their shifts slashed, this isn’t always feasible. 

When politely sitting down with the person who is building an empire on paying you a pittance doesn’t work, claims can be escalated to federal court. If found guilty, employers are penalised under the Fair Work Act, made to backpay wages, and make payments to Fair Work. 

But, as we’ve seen time and time again, existing penalties aren’t high enough to deter illegal behaviour. Savings made from not paying staff properly outweigh penalty costs. The industry is thus built on a business model of wage theft. 

In the lead-up to the federal election, the Coalition announced it would introduce legislation to criminalise wage theft, meaning employers who deliberately underpay their workers could face jail time. State-based criminalisation laws have also been proposed, but with most employment law handled federally, these state laws would be virtually unenforceable.

Around the same time, Labor pledged to introduce a tribunal for unpaid wages and entitlement claims. The tribunal would be attached to the Fair Work Commission, meaning costly claims through the Federal Court could be avoided. 

Unsurprisingly, employer and industry groups are against the idea. In a parliamentary inquiry in Queensland last year, submissions argued new laws would discourage people from employing staff (how they’d get around hiring staff we’re still not sure). Industry body Air Group jumped straight to hyperbole, questioning what would happen next: “Will misuse of sick-leave become known as ‘time theft’ and also become a criminal offence? Will failure to pay a bill or underpayment of an account become a criminal offence?”  

How much of this legislation has been put in place? Absolutely none of it. Months on, no real changes have been made on either the state or federal level to criminalise wage theft. 

Fair Work and ‘enforceable undertakings’

Much has been made of the $200,000 “fine” that MAdE Establishment was forced to pay. It’s worth clarifying that this is not a fine, but a voluntary payment made under what’s called an “enforceable undertaking” (EU) —  the highest ever negotiated, the FWO was quick to tell us. An EU is an agreement between a regulator and a business that has failed to follow the law in lieu of taking that business to court. In the case of Fair Work, an EU generally has to include:

• An acknowledgement by the employer that the law has not been followed
• An agreement by the employer to do certain actions to fix the breach
• A commitment by the employer to future compliance measures.

It can include (but doesn’t have to) a “contrition payment” like that made by MAdE. The Fair Work website gravely warns that “not complying with the agreed terms of an EU is a serious matter. We can apply to the courts to enforce the terms of the agreement.”

Except… they never do.

Indeed Robert Corr, a former prosecutor at the Commonwealth Department of Public Prosecutions and longtime critic of the enforceable undertakings approach, has pointed out the absurdity of the situation. The EU makes it exceedingly clear that the company knew of the problem, promised to fix it, and didn’t:

On 30 October 2015, in response to [a letter of caution], George Calombaris, on behalf of the Press Club, sent the FWO a letter which stated that the Press Club would carry out reconciliations for each employee engaged on an annualised salary and rectify any identified shortfall. These reconciliations were not subsequently undertaken at the end of each year.

And yet FWO assures us that if they had believed the company had deliberately broken the law then they’d be in court right now. 

Visa rules

Within an industry already disproportionately beset with wage theft, the young and migrant workers represent a disproportionately high number of victims.

It’s worth noting that the majority of wage theft affecting migrant workers goes unreported — the most comprehensive study shows nearly half of migrant workers (excluding 457 visas) earned less than $15 an hour. Laws regarding migrant workers more or less guarantees this will continue. 

Employers can leverage visa conditions to guarantee a worker’s silence; whether by threatening to withhold sponsorship, firing an employee who complains, or having them engage in work that breaches their conditions (say, having an international student work for more than 40 hours).

There is a memorandum of understanding between Fair Work and Home Affairs regarding these situations. It stipulates that if you hold a temporary visa with work rights and have not complied with your visa conditions due to workplace exploitation, Home Affairs will “generally” not cancel your visa, detain or deport you as long as you have sought assistance from the FWO. For a visa holder who doesn’t have any work entitlements, Home Affairs guarantees nothing but that their case will be considered on merit. This is called the “assurance” protocol.

Unions and academics have long been calling for an amnesty for exploited migrant workers, or at the very least a “firewall” between the agencies so that migrants can report exploitation without fear of being deported or detained.

Dispiritingly, a report from the Migrant Workers Taskforce in March this year acknowledged the fear that prevents migrants coming forward, but concluded that the assurance protocol was apparently just fine.