Underpayment criminalisation a ‘very big sledgehammer looking for a nut’, says small business

It comes on the heels of a fresh industrial relations war as the new provisions – which include up to 10 years of imprisonment for breaches – are set to kick in at the start of next year.

Council of Small Business Organisations Australia chief executive Luke Achterstraat.

The Albanese government’s laws criminalising underpayment of wages is a “very big sledgehammer looking at a nut” for small businesses despite a carve-out for employers of fewer than 15 workers, the peak small business advocacy group says.

It comes on the heels of a fresh industrial relations war as the new provisions – which include up to 10 years of imprisonment for deliberate breaches – are set to kick in at the start of next year.

The government earlier this month released the Voluntary Small Business Wage Compliance Code Declaration – under the legislation – that sets out more lenient compliance requirements for businesses with fewer than 15 employees.

Council of Small Business Organisations Australia chief executive Luke Achterstraat said the definition should cover businesses with fewer than 50 employees instead.

“A lot of genuine small businesses will easily hire more than 15 people at a given time – maybe during a seasonal upswing or they might take on casual workers,” he said.

“We feel the code is a good initiative and we’d like to see more small employers actually be able to benefit from it because – under the current system – the idea of a small business with 16, or 17, or 18 staff they’re not classified as a small business, so the idea of them in the technical eyes of the law being seen the same as a big ASX company like Woolworths, it doesn’t really make any sense.”

The root issue, he said, was the complexity of the broader industrial relations system.

“The fact the government has admitted via the code the ­ambiguity and complexity of the system goes to show the deeper-set problem we need to solve: creating a clear, fair and ­comprehendible IR system that works for, rather than against, small business,” Mr Achterstraat said.

The Coalition seized on a similar point. “The overwhelming majority of businesses try to do the right thing by their employees,” opposition employment and workplace relations spokeswoman Michaelia Cash said.

“Most underpayments are the result of businesses dealing with the overly complex and confusing Fair Work Act.

“The fact both the Department of Employment and Workplace Relations and the Home Affairs Department have underpaid staff since the Albanese ­government has been in office is proof of the complexity of the system.

“What chance do businesses, particularly small businesses, have if government departments can’t get it right?”

Workplace Relations Minister Murray Watt said the long-­awaited wage-theft laws, to come into force from January 1, would mean it would “finally” be a ­criminal offence to deliberately ­underpay workers. “Businesses deliberately doing the wrong thing will be caught, and will be charged,” Senator Watt said.

Maximum financial penalties range from more than $1.6m for individuals and $8m for companies. The government stressed the offence would not apply to honest mistakes and would not apply to employers who inadvertently underpaid workers.