SA Weekend: Underpaid workers fighting back in the courtroom

The inside story of how thousands of Australians who have been the victim of wage theft are finally fighting back. Plus, the big corporate names dragged into the courtroom.

Xiao An was looking for a job. She had recently graduated from her marketing course at the University of South Australia and the Chinese ­national was keen to stay in Adelaide. Like many international students, Xiao An looked on the Adelaide BBS website. It’s a kind of Chinese-language marketplace where you can find houses to rent, cars to buy and where jobs are advertised.

“When I graduated I wanted to find a job and get some experience,” the now 21-year-old says. “I feel this is suitable for me and I applied.”

The job she found was in advertising and sales for a wine business based in the city. Xiao An, not her real name, was there for two months and was never paid. The ­excuses started early. It was the end of the financial year, she was told. The company was being restructured.

“They even showed me the screenshot of the bank account of the company, saying they did not have enough money to pay so I have to wait,” she says.

“I feel like I am constantly being frauded. The boss kept making unrealistic promises to me that I’ll be promoted, getting a high ­yearly salary.”

All the while, Xiao An was working five days a week, sometimes weekends as well.

“I had to work full-time, and even overtime during weekends in that toxic, competitive environment but nothing was paid. Sometimes after working, I cried all the way to home. It was so stressful,” she says.

The issue of workers being underpaid, or not paid at all, was thrust firmly into the spotlight in February when a video of an assault at the Fun Tea store in Chinatown went viral. The video showed a young worker at Fun Tea being slapped and kicked after complaining she was only being paid $10 an hour, less than half the wage the worker was entitled to. The ­national minimum wage is $20.33 an hour.

A man called Lei Guo has pleaded guilty to the assault and will be sentenced next month. Guo was said to be a friend of then Fun Tea director Jason Duan, who later appeared on a video with a Sydney-based YouTube user and admitted he had only paid the victim $10 an hour.

A large crowd gathers on Moonta Street, Chinatown, Central Markets for a rally/protest regarding the wage theft and assault on a worker. Picture: Tricia Watkinson

The assault of the young student caused immediate backlash and brought renewed focus on to a dark part of the national economy – the exploitation of young and vulnerable workers by those who employ them. Often they are international students on visas with no understanding of their rights, with poor English skills and little support.

The federal government’s Fair Work Ombudsman started an investigation into Chinatown’s restaurants and a preliminary report found “very high” non-­compliance levels.

That investigation is ongoing but in April, the Ombudsman Sandra Parker said: “Our intelligence indicates that Adelaide’s Chinatown precinct employs many workers on visas who may also have limited ­English skills, which can lead to vulnerability and exploitation.” It is expected the Ombudsman will file charges year end.

Chinatown Adelaide president Herman Chin declined multiple opportunities to speak to SAWeekend, but this issue is not confined to ­Chinatown.

According to some, wage theft is a growing problem across the state and is not confined to small operators trying to save a few dollars by snipping wages. It’s also not a problem confined to the city, with workers in farming and horticulture also victims of wage theft. The use of unlicensed labour-hire firms is ­another point of contention. As is the rise of the so-called gig economy and the numbers of people working for companies such as Uber who are battling to be classified as workers rather than as ­independent contractors.

Many companies have already been caught doing the wrong thing. Household names found to have underpaid workers include Coles, Qantas, Zara, Caltex and Bunnings. Retailer Woolworths had to repay workers $315m. Fast food giant McDonald’s and SA-based firms Drakes, Romeo’s Retail Group and OTR are also facing legal action, but have denied any wrongdoing.

A slew of celebrity chefs have built their fortunes partly on the back of underpaying staff. Former MasterChef host George Calombaris ­repaid $7.8m in unpaid wages and superannuation to more than 500 current and former employees.

In 2015, media reports on convenience store operator 7-Eleven highlighted the chain’s systematic rorting of its employees. It ended with 7-Eleven paying back $176.3m in wages, interest and superannuation to more than 4000 employees. The Fair Work Ombudsman brought 11 suits against the company which was also fined more than $1.8m for its behaviour.

Ed Cavanough is policy director at the McKell Institute think tank. He believes the 7-Eleven scandal was a turning point in the public perception of wage theft.

“This wasn’t the small business mum and dad accidentally not putting the wage up on July 1,” Cavanough says. “It was sophisticated, mechanised, intentional underpayment. And it was directly tar­geted to the most vulnerable workers.”

In a paper called The Economic Impact of Wage Theft in South Australia he estimates about 170,000 South Australians are hurt by wage theft. He further estimates it costs workers between $280m and $470m a year. He calculates lost superannuation income for those workers could be about $270m a year. Beyond the impact it has on the spending power of employees, Cavanough says, there is a multiplier effect throughout the economy and it costs the state between $31m and $60m in lost GST revenue each year.

George Calombaris. Picture: Tim Carrafa

According to Cavanough, there are various practices that can be defined as wage theft outside of paying below the minimum wage. It includes not paying or ­underpaying overtime and superannuation, incorrectly classifying workers, working for free while training, not allowing meal and rest breaks. Or even workers being paid in food and drink.

But Cavanough says it’s not only workers who are the victims when businesses do the wrong thing. He says it also hurts small business owners who are complying with the rules.

“I have a lot of friends and small businesses all around Adelaide running pubs and cafes. These are working class people, as are their employees, who have taken out a couple hundred grand loan to start up a small business,” he says. “It’s bizarre to me that you have to have restaurants within 50m of each other just around the corner, competing on labour costs when we have a national regulator (the FWO).”

And he dismisses the notion that many underpayments stem from the rules surrounding workers being overly complex.

“It’s not that hard,” he says. “People have accounting software, they have ­accountants, people know how to how to do that. It’s a bit of a trope, but it is accurate that you very rarely hear businesspeople significantly overpaying their staff.

“It’s an extraordinary argument to make. And frankly, it shows very little ­respect for the capacity and intellect of small business people.”

Supplied Editorial Ed Cavanough, manager of policy at the McKell Institute. Picture: SUPPLIED

There is a growing push within South Australia to criminalise wage theft. It’s a step already taken by Queensland and Victoria, and had initially been part of the federal government’s industrial relations Bill, which was passed in April. However, the wage theft provision of the Bill was eventually dumped as the legislation was watered down to secure its passage through parliament.

The Victorian legislation, which came into effect this month, will see fines of up to $192,264 for individuals and $991,320 for companies and up to 10 years’ jail for employers who dishonestly withhold wages, superannuation or other ­entitlements.

There are around 3000 restaurants, cafes and caterers in SA, according to Restaurant and Catering Association chief executive Wes Lambert who says differing rules between state and federal governments, and civil and criminal prosecutions could pose problems. That the crossover and different rules for different bodies could make businesses less likely to co-operate in cases of unintentional underpayments. Lambert also says Covid has changed the rules. He says with fewer people now using cash to make purchases, there were also less off-the-books, cash payments being made to workers. “Those bad actors, that did exist, a small percentage of intentional under payers, are being weeded out because of the lack of cash.”

BusinessSA chief executive Martin Haese also says genuine mistakes shouldn’t be penalised and also cautions against ­singling out small businesses for ­punishment.

“Business SA firmly rejects any legislation to criminalise underpayment of wages where accountability does not fall evenly on individuals for genuine mistakes made, regardless of the legal entity in which they operate from, including public servants and politicians,” Haese says.

The former South Australian Labor government also took a commitment to the 2018 election to make wage theft a criminal offence. Labor’s shadow attorney-­general, Kyam Maher, says the party is currently finalising its election policies.

“We will certainly be considering how that (wage theft criminalisation) looks at the coming election,” Maher says.

State treasurer Rob Lucas says he had supported the federal government’s abandoned initiative to introduce a criminal sanction but gave no indication he would bring in a state-based alternative. Like Haese, Lucas also warned against viewing all underpayments as theft as it could damage business. “For example, we have seen accusations of ‘wage theft’ against the national broadcaster ABC (accused by the unions of deliberately underpaying 2500 casual staff over a six-year period) and reputable local ­retailers Drakes and Romeo’s, which ­clearly has ramifications for their brand and business,” he says.

The Shop Distributive and Allied ­Employees Association looks after almost 30,000 retail employees and its secretary, Josh Peak, says victims of wage theft are at the low-end of the pay spectrum.

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“The other thing that’s often missing is basically retail workers, hospitality workers, fast food workers, they’re already low-paid workers. And then they’re having money docked. That’s why we’re really clear around wage theft laws needing to be part of it,” Peak says.

He laments the decline of union members across the workforce and says current penalties aren’t stiff enough. Under the Fair Work Act, there is a maximum civil penalty on an individual of $12,600 and $63,000 on a corporation. There is also a requirement to repay unpaid moneys but often ripped-off workers settle for less than what they are owed in mediation, so they don’t have to be subject to a lengthy and expensive court battle.

Peak says there is also an increasing tendency towards what some employers call “pre-work”. That is workers being asked to come in before the scheduled start of a shift to make sure everything is ready to go once the shop opens.

“Again, these aren’t people on salaries getting paid squillions. They’re people being paid the bare minimum. So every minute needs to be paid,” he says.

Back in Chinatown, the battle for legal pay has turned some international students into activists. It’s a brave move because it’s a small community and some of those who speak out are black­listed from further employment.

Jacky Chen says he is one of the names on the blacklist. Chen arrived in Australia in 2017. He backpacked around Australia and spent 18 months in the Northern Territory, working a variety of jobs. He says the problem of wage theft in southern Australia is much worse than the rest of Australia.

Chen came to Adelaide last year to study mechanical engineering, but has now set up the SA Labour Hub Info organisation, which helps and gives advice to underpaid workers. He has done an audit of Chinatown businesses and has spoken to workers in 155 businesses in the area.

“We’ve found that wage theft is happening in many different industries, including but not limited to hospitality, beauty salon, retail, fast-food and take away, commercial cleaning, media, winery, law firm, express delivery, education agency, migrant agency, massage, dental,” he says.

Jacky Cheng in, Chinatown, Picture: Tricia Watkinson

Chen says his studies found the wage range was zero to $14 an hour, with a median wage of about $11. One well-known supermarket chain in the CBD was paying one worker $13 an hour.

Chen says employers look to exploit the vulnerability of international students. Under the terms of their visas, students can only work 20 hours a week. But many need to work more hours to survive. Twenty hours a week at $10 an hour won’t get you too far in Adelaide. ­Employers will then use an apparent breach of the visa condition as another tool to keep a worker from filing a complaint, threatening them with deportation if anything is said.

Students from countries such as China, who sometimes struggle with the English language, also find it hard to pick up work outside their own community.

“If they don’t take the job they will fall into poverty,” Chen says. They also know if they don’t take the job on offer then someone else will.

Chen says not much has changed since the Fun Tea incident and all the bad publicity it brought to Chinatown. He says ­employers are now less likely to advertise rates of pay on the Adelaide BBS website, now inviting prospective employees in for “face-to-face” meetings to discuss it. And there is the ever-present fear of payback.

“Workers in Adelaide are much more afraid to take action due to fear of blacklisting by the employers which happened to me and other workers on Adelaide BBS,” he says.

Part of the solution may be for universities to provide more information to its students when they arrive in the country to tell them what their rights are and what support is available to them.

Meng Lui came to Australia in 2018 to study social work at Flinders. She, too, was ripped off by an employer.

“The first month I was here, I realised that everyone around me was doing an underpaid job, like all the international students I knew,” Lui says. “At that stage I didn’t know that was illegal.

“It’s the whole culture of being ­exploited, because if you’re a new person come to the country ... everyone around you is doing the same, being exploited, you kind of normalise the situation.”

Lui found a job at a bubble tea shop. The pay was $10 an hour.

Meng Lui in Chinatown. Picture Matt Turner.

“It’s mentally tough as well, because when my parents sent me to Australia, they didn’t expect me to do a labour job only get paid $10, even lower than the pay in China,” she says. “The first time when I heard the minimum wage was $20 I was ­totally shocked.”

Lui says Adelaide’s reputation is suffering internationally because of the Fun Tea assault. She says the video has been viewed 55 million times in China.

“For many people, the Fun Tea incident is the first time they knew the city of Adelaide. And now, in China they call the city, like the bubble tea incident city. If I’m a parent, I want to decide where my children is going, I won’t choose Adelaide.”

Lui is now working at the Working Women’s Centre, which helps others who have been in a similar position, including some ex-employees of Fun Tea.

The centre’s chief executive, Abbey Kendall, says we have only seen the “tip of the iceberg” when it comes to wage theft. Kendall says the centre has recovered $700,000 in lost wages over the past year, with only four lawyers on staff.

“We could take on another probably 10 lawyers and still not scratch the surface,” she says. Kendall says the pandemic has made things worse, even though there are fewer international students in SA. The state’s youth unemployment rate has fallen but it’s still 9.4 per cent, significantly higher than the overall rate of 5.3 per cent.

“The desperation of the workforce ­increases and therefore the ability for ­employers to be able to take advantage of that and exploit that desperation is huge,” she says.

A study by Flinders University academic Marinella Marmo in 2019 called Slavery and Slavery-like Practices in South Australia demonstrated exploitation of workers in some farming and horticultural areas.

Marmo documented a variety of horrors, including the “working hostel model” where workers who are commonly on temporary visas or backpackers are charged a large portion of their wage for accommodation. In one case, workers were being charged $150 a week for a room they shared with two others paying the same rate, plus another $25 a week for ­internet access. The accommodation provider often also takes a worker’s passport. Other studies have found fruit pickers can earn as little as $3 an hour.

But the report found few complain. For familiar reasons.

“At stake is not just the possibility of losing one’s job; there have also been cases where the employee raises a complaint and the employer or contractor then ­informs the authorities of their ­migration status, leading to the ­employee’s deportation (because they were in breach of their visa conditions or did not have the correct working rights),” the report says.

If agriculture and picking fruit is one of the older industries, the so-called “gig” economy is at the other end of the spectrum. Gig workers are those who have a ­relationship with a company, but are not defined as employees and are often classed as independent contractors. It means there is no hourly rate or benefits such as holidays or sick leave.

The rise of companies such as Uber, Uber Eats, Deliveroo and Airtasker are built on the back of gig workers. But it’s also been controversial.

Five food delivery workers died on Australia’s roads in a two-month burst. Such workers are placed under extreme pressure to deliver quickly, and the rates of pay so low, that they aim for as many jobs as possible. Yet they generally earn between $10 and $15 an hour.

The McKell Institute’s Ed Cavanough says the gig economy is a new term for an old concept.

“It’s just a replica of the 19th century,” he says. “You only had work on the day that you rocked up, there is no security, so that kind of metastasises throughout the entire economy.

“They aren’t regulated, they are completely unregulated and it’s just a recipe for underpayment. That’s why I think it’s getting worse and worse and worse.”

Xiao An, after enlisting some legal help, managed to retrieve some money from her former employer. But she thinks more must be done to stop others being ripped off as she was.

Maybe, she says, there could be some sort of register set up that potential employees could check.

“Sometimes bad bosses simply close the current business after being sued and ­reopen another one later,” she says.

“I want the ­underpayment issues be recorded in the boss’s personal credit records boss and affect them forever.”