AICD submission on wage theft to the Senate's Inquiry into the Closing the Loopholes Industrial Relations Bill

On 6 October 2023, the AICD made a submission to the Senate Education and Employment Committee’s Inquiry into the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Bill).

While the Bill covered a range of Industrial Relations issues, the AICD submission focused on the wage theft proposals only.

The AICD reiterated its strong condemnation of deliberate and systematic wage underpayment. We emphasised, however, that it was important to make a clear distinction between a business model reliant on the so-called “wage-theft model”, and unintended wage underpayment caused by navigating a complex Industrial Relations system. In line with this, we supported the current proposal to criminalise intentional wage underpayment only.

More broadly, however, we considered that the Bill focused excessively on punishment and deterrence, rather than on addressing the root causes of unintentional wage underpayment, being the complexity of the Industrial Relations system, and the support of timely rectification. More specifically:

  • The proposed immunity from criminal prosecution under the proposed Cooperation Agreement regime was too narrow, and failed to incentivise self-reporting.
  • We opposed the proposed articulation of the civil liability “recklessness” test, which replicated the Criminal Code and would impose liability for a “serious contravention” where the person/ corporation is aware of a substantial risk that underpayment would occur, and proceeds to take that risk notwithstanding that it is unjustifiable to take the risk. We are concerned that, given the complexity of the Industrial Relations System, there is often a substantial risk of an organisation coming to an honest, though ultimately incorrect, view as to the amount payable. As such, we do not consider it a good policy outcome that these occurrences be termed “serious contraventions” and subject to the significant and increased penalties proposed.
  • Given the existence of state wage theft laws in Queensland and Victoria, we started that any federal wage theft law should ‘cover the field’ to avoid fragmentation and inconsistency.
  • We also suggested clarification of the wage theft offence (noting some drafting ambiguities), including setting out more clearly how the principles of attribution of corporate criminal responsibility, and individual accessorial liability, would apply in the wage theft context.   

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