More complexity will only hinder payment of wages
31 Aug 2023|
You may have noticed a number of high-profile employers admitting they have underpaid their employees.
The Reserve Bank, the ABC, various large corporates, law firm Maurice Blackburn and, last week, the Department of Employment and Workplace Relations confessed to staff underpayments. We need to ask the question: what is going on here?
There has been no great outbreak of criminal ideation among this generation of employers. The fact is that none of these employers would consider for a moment deliberately underpaying their staff.
What is actually going on is an entirely separate phenomenon of increasing complexity leading to execution breakdown.
The Reserve Bank deputy governor Michele Bullock hit the nail on the head when she said the RBA underpayments were the “result of the complicated nature of our industrial arrangements and their interpretation”.
The fact is that our industrial relations laws have become hideously complex to the point where even highly skilled experts struggle to manage their systems.
If the Reserve Bank has difficulty complying with the system, you can only imagine how stressful the task is for small and medium-sized businesses. The Australian workplace relations system is recognised as one of the most complex in the world. The Fair Work Act 2009 contains over 1200 pages of legislation.
It should be no surprise that a majority of businesses have described Australia’s workplace relations regulations as either “very complex” or “extremely complex,” according to surveys conducted by the Australian Chamber of Commerce and Industry.
Last year the government introduced another layer of complexity to the system through 288 pages of new legislation introducing multi-employer bargaining and other workplace law changes.
The government’s cost estimates for this extra compliance burden on Australian business were revealed at the time – small businesses $14,638; medium businesses $75,148; and large businesses $94,311.
For the businesses with more than 20 employees ultimately impacted, the costs in finance, time and stress are significant.
The obvious answer to this problem is to address the root cause by reducing the complexity.
Unfortunately the government is doing the opposite – it is soon to introduce yet another major round of complex legislation involving labour hire, casual workers and contractors.
Here is what we can predict with ease: the government turning up the dial again on complexity will result in yet more wage underpayments across Australia.
This government action is obviously not a deliberate form of taking money from workers but it could constitute a form of reckless indifference to that outcome.
The irony is that while the problem of complexity-induced underpayments is one that results from ministerial decisions, the focus of the government right now is on introducing new criminal penalties on employers for underpayment.
This is a classic example of focusing on the symptoms rather than the cause. The Australian Chamber of Commerce and Industry’s position on this matter is clear: the first priority must be for policymakers to recognise their own role in causing underpayment issues through adding complexity.
Fix that problem and much of the air goes out of the underpayment balloon.
Making wage theft, like any robbery, a criminal offence is perfectly reasonable but inadvertent underpayments should not be treated as deliberate behaviour.
As legislators consider the next raft of IR changes, they need to consider that adding complexity to the system is contributing to workers being underpaid.
Admitting the problem is half-way to solving it.
Published in The Daily Telegraph on August 31, 2023