Wage theft: When ‘chief people officers’ forget workers and their rights

Wage theft is still rife in Australia and shows no sign of slowing down. It begs the question: why is it still happening?

As an educator, I get approached by firms seeking to recruit human resources (HR) graduates. More recently I have noticed that large firms and management consultants point to graduates with specific skills and knowledge in industrial relations (IR), as distinct from HR.

During our discussions, they have alluded to the fact it is becoming harder to find such skills and capabilities in people, especially when it comes to navigating around our IR systems and labour laws, our classification structures and quite unique “award system”.

It got me thinking, could the dwindling number of IR professionals in organisations be contributing to the spread of wage theft?

Human Resources departments may benefit from employment staff with skills in industrial relations.Credit: Peter Rae

Australian workers have been subjected to wage theft as far back as the 1880s, with the rampant stealing of Indigenous wages, and even during the “glory years” of our highly centralised and highly regulated award system in the early-mid-1900s.

However, what we had in the 1970s, 80s and 90s was the “IR manager”, alongside the “personnel manager”. Their “specialty” was to ensure workers were paid what they were entitled to by law, and how they were classified. Indeed, interpreting awards, and nowadays “enterprise agreements”, was the bread and butter of the IR profession.

Critical to the role was having the particular skill-set and expertise to master the unique “award” system. These skills were often acquired through university education and professional training and practice.

HR is distinct from IR. The HR manager became the buzzy title in the 1990s with a focus on its “human resources”. Fast-forward 30 years, we now have new job titles such as head of people & culture, chief human capital officer, chief people officer, and even employee experience architect. These catchy titles more appropriately reflect the modern worker and the transformation of work due to the “digital revolution 5.0″.

Coincidentally, we now see a reliance on management consultants and law firms for advice and services relating to industrial relations matters, rather than building such capability in-house.

Maybe HR is overlooking its primary role … looking after its “human resources” (and their rights)?

Today, HR and “people & culture” professionals appear preoccupied with meeting the needs of executives at the top end, ensuring HR strategy is aligned with company goals (and effectively cementing their own legitimacy).

By flouting the “bread and butter” roles and failing to keep up to speed with “the IR system”, we now see problems of award and agreement compliance, all at the expense of the worker.

Hospitality workers are among those who have experienced wage theft.Credit: Bloomberg

Wage theft is often explained away by employers as an innocent mistake or an oversight because the system is too complex, which is aggravated by the diverse and growing array of work arrangements in the gig economy.

But is it perhaps really due to a skills shortage in the IR profession?

Wage theft is not new. Yet it still elicits widespread attention because it persists, and in fact is getting worse. In the last financial year alone (2021-22), the Fair Work Ombudsman reported record recoveries of $532 million in unpaid wages and entitlements for 384,805 workers (more than 2.5 times the previous financial year, and more than three times the year prior to that). Let’s face it, we know we have a conundrum when our own public service and government agencies are falling prey.

The media has been replete with stories about wage underpayments including at the ABC and the Reserve Bank. The higher education workforce is not immune, with reports unveiling the ugly truth behind the university sector.

We often hear claims that IR is stuck in a time warp, driven too much by policies and procedures and reliant on its legacy founded on the industrial era.

IR, it is said, fails to reflect the new digital age or rapidly changing contexts, which require agile and adaptable firms and equally agile and adaptable workers. However, this sentiment, and the new catchy HR titles popping up everywhere, appear to be missing one key focus… the worker and their rights. Indeed, COVID unveiled the importance of the continued legitimacy of the IR profession in the world of work and employment, witnessing many issues become central to the wider public.

It begs the question: should we go “back to the future” and bring back the IR professional – or is it time to revamp our IR system and labour laws altogether?

Dr Betty Frino is a lecturer in management, school of business at the University of Wollongong.

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