The Migrant Workers’ Taskforce was established as part of the Government’s response to the revelation of significant wage underpayments in certain industry sectors. There was much publicity concerning 7-Eleven franchisees, but demonstrably the problem was more widespread.
We had been closely involved in the 7-Eleven issue having been appointed by the company to conduct independently the wage remediation program it established following the Fairfax/Four Corners revelations. After being dismissed by the company from this role, we were asked to lead this Taskforce to monitor 7-Eleven’s subsequent actions and to consider what more needed to be done generally in relation to the problem of wage underpayment.
In pursuing our terms of reference we have to be mindful of Minister Cash’s comments in relation to the establishment of the Taskforce. She said at the time of its first meeting that ‘the Taskforce will focus on action and results. Compliance or regulatory weaknesses that allow exploitation cases to occur will be a key focus. Exploitation of any worker in Australian workplaces will not be tolerated by this Government.’
Wage underpayment may be inadvertent, but the outcome is no different as to when it is deliberate. The terms wage exploitation and wage theft are more emotive, but also apt descriptions of the problem, which in essence involves employers not complying with the minimum legal entitlements of their employees.
This report provides a summary of the work of the Taskforce and makes recommendations. The Taskforce brought together senior representatives of Commonwealth departments and regulators, thus enabling a whole of government focus on the problem, which has not always been present in the past. In some cases, we have gone further than other members of the Taskforce could unanimously agree on.
We wish to acknowledge and thank the Taskforce members and the Secretariat staff from the Department of Jobs and Small Business for their significant contributions to the work of the Taskforce.
Our attention has mainly been on the employment experience of temporary migrants who have work rights under international student and working holiday maker (backpacker) visas since in large part these appeared to be the areas where problem was greatest. Despite the gaps in evidence, we have sufficient understanding to conclude that the problem of wage underpayment is widespread and has become more entrenched over time. The most comprehensive academic survey to date on the issue suggests as many as 50 per cent of temporary migrant workers may be being underpaid in their employment.
The number of temporary migrants admitted to the country under the international student and working holiday visas have been uncapped, and particularly in the former category, has been growing strongly in recent years. Temporary migrant workers now constitute about six per cent of the workforce, excluding New Zealand visa holders, and are having a significant effect on the operation of the labour market.
Wage exploitation of temporary migrants offends our national values of fairness. It harms not only the employees involved, but also the businesses which do the right thing. It has potential to undermine our national reputation as a place for international students to undertake their studies and may discourage working holiday makers from filling essential gaps in the agricultural workforce. This problem has persisted for too long and it needs concerted action to overcome it.
Wage underpayment is simply non-compliance with existing legal requirements. It is not a problem of having too many temporary migrants. And whilst some might suggest the problem might be reduced if minimum wages were lower, we do not consider this to be the appropriate response. We recognise the importance of our national wage setting mechanisms in determining appropriate living wages.
The Taskforce has essentially considered four key elements of compliance. First, there is ensuring market participants are well aware of their entitlements and responsibilities and of how and where to get assistance. Second, there is the role of regulators in taking action to promote compliance. Third, there is the important issue of ensuring that employees obtain redress for underpayment where this has occurred; and fourth, there are questions as to whether existing laws, functions and powers of regulators are appropriate to enforce effective compliance when necessary.
More needs to be done in each of these four areas if significant progress is to be made toward eliminating wage exploitation. The recommendations reflect this. Together they entail Government committing to introducing a package of further initiatives, additional funding and appropriate oversight of performance outcomes. In this regard, Australia can learn from the experience of the UK, which has appointed a Director of Labour Market Enforcement to provide overall coordination of regulatory effort and to assist Government to determine and monitor priorities.
A major area of consideration relates to the adequacy of the enforcement response of the relevant agencies, primarily the Fair Work Ombudsman (FWO), which has the major responsibility, but also the Australian Border Force. We are of the view, given the scale and entrenched nature of the problem, that there needs to be a much stronger enforcement response than has been evident to date. Having said this, we recognise that the FWO has responded strongly to the problem in recent times. It would, nevertheless, be useful for the Government to undertake a public capability review of the FWO to ensure it has the resources, tools and culture necessary to combat effectively the wage underpayment problem particularly affecting temporary migrant workers.
The FWO needs to have a stronger profile with migrant workers, which will in part come from a stronger enforcement response. The evidence now suggests that the organisation is not well known or understood. It is confusingly styled as an ombudsman. The term normally covers dispute resolution schemes, not regulatory schemes. Even so, the FWO does not have constitutional power to determine disputes; it provides mediation services and assists a relatively small number of employees who take their disputes to the small claims court. In our view, the FWO could more strongly support the enforcement and litigation objectives (rather than the mediation objectives) of the Act.
We would like to see the title Fair Work Ombudsman changed to something which better reflects the organisation’s regulatory role. Re-naming the organisation would enhance awareness of the workplace regulator which would boost its effectiveness in preventing wage exploitation. We appreciate that this is an issue that goes beyond our immediate focus on temporary migrant workers.
Whilst the FWO has primary responsibility for ensuring compliance with wage laws, the education and agricultural sectors, which benefit greatly from the presence of international students and working holiday makers respectively, also need to play greater roles in supporting this compliance effort than they have in the past. Ultimately it is the reputation of these sectors which is at stake. Immigration law also needs to play a stronger supportive role to employment law as regards temporary migrant workers.
We are concerned not just at the incidence of wage exploitation, but also with the detriment suffered by employees as a result of this conduct. The experience of the 7-Eleven wage remediation program provides numerous lessons for businesses and governments in what can and should be done in this area. We consider the regulator could make greater use of compliance notices in seeking to obtain redress for underpayments. However, employees should not have to rely unduly on the regulator to obtain redress. Workers should have ready access to an effective low cost, informal small claims dispute mechanism so that they can take action themselves.