Why Coles and Target won’t be the last big businesses with wage theft scandals

MATTHEW ELMAS

FEBRUARY 21, 2020

SmartCompany

This week’s revelations that more large retail chains cheated workers out of millions of dollars are unlikely to be the last high-profile wage theft scandals to emerge, as corporate Australia reckons with one of the worst worker exploitation crises in recent memory.

While media attention has so far focused mainly on wage theft in the hospitality and retail sectors, Ben Renshaw, an employment tax expert at advisory firm BDO, says the scale of the problem is much larger than previously thought.

Speaking to SmartCompany, Renshaw says his firm is speaking to clients in sectors across the economy who’ve identified underpayment concerns in their own companies.

“It’s becoming clearer as time goes on that this problem is wider and deeper than people thought,” Renshaw says.

“It’s coming from a number of things: process problems, system problems, policy complexity, policy changes … [and] poor governance.”

Earlier this week, supermarket chain Coles joined rival Woolworths in the unenviable and seemingly ever-growing pool of businesses which have failed to pay their workers properly, admitting to cheating more than a thousand staff out of $20 million over six years.

A day later, Wesfarmers — which owned Coles while the underpayments were occurring and still retains a part stake in the business — came clean with a further $9 million in underpayments at Target, and $15 million within its industrial division.

Making it a trifecta, Rebel and BCF owner Super Retail Group on Thursday admitted it had underestimated the scale of its own wage theft scandal to the tune of $8 million.

But retail chains aren’t the only ones ripping off their workers — according to Renshaw, firms in the telecommunications, aged care, disability care and manufacturing sectors are also contending with their own wage theft issues.

“We’re talking to clients who are either in trouble or concerned about this stuff across almost every industry,” Renshaw says.

“Anywhere where you’ve got, and it sounds awful, but lower-skilled, lower-paid workforces covered by awards, particularly were they are in jobs working outside of a typical 9-5.”

As attention turns to policy solutions to address rampant staff underpayment in Australia, Renshaw says the Morrison government should consider whether a royal commission may be an appropriate tool to investigate the scale and depth of the issue.

“We’re talking about a problem that seems to be pervasive across all industries at this point … maybe we’re in royal commission territory.”

“I’m not saying that’s the right thing to do, but we need some sort of review that can look at all aspects of this problem.”

The Senate is currently undertaking an inquiry into wage theft in Australia, and is expected to examine whether policy settings are adequate to deter companies from cheating workers.

But that probe falls far short of the powers of a royal commission, which are not run by politicians and have broad powers to call witnesses to provide evidence and answer questions under oath.

Council of Small Business Organisations Australia (COSBOA) chief executive Peter Strong, is against the prospect of a wage theft royal commission, but concedes staff underpayment issues are structural in Australia.

“They can’t get it right because its too complicated,” Strong tells SmartCompany.

“With technology we can, and I’ve talked to the president of the FWC Iain Ross about this.

“We should be able to connect the Fair Work Commission up, all the payroll providers should be able to connect up, so when there’s a pay rise, it’s automatically noted and goes into the system.

“That system then tells employers, you press a few buttons, and it changes the pay.

“You should also be able to go to the Fair Work Ombudsman to check whether you are compliant, and they should be able to go in remotely into your software and have a look,” Strong adds.